Feeder Associations of Alberta: Program Information

History of the Feeder Association Loan Guarantee Program

The Feeder Association Loan Guarantee Program was first established by two orders in council dated September 23, 1936 and guaranteed 25% of the deficits incurred by the lender in respect of borrowings by the Lacombe, Olds, and Lethbridge Feeders Associations and the Central Alberta Livestock Feeders Association Limited. The first lender was the Dominion Agricultural Credit Company Limited and the total amount of guaranteed borrowings was $200,000.

Over 70 years of operation the Program has provided a guarantee for $6.29 billion of private financing for feeder association members in Alberta. The following table illustrates that the Program has financed 17- 24% of the calf crop each year providing a significant portion of the lending requirement of the industry.


Feeder Association Guarantee Program lending as part of total Industry (2001 – 2006)

Year Aug. 31 yr end	#HD (',000)	Annual Alberta Calf Crop (',0000*	Percent of Ann. Calf Crop	$ Value Financed ($M)	Value Financed as Percent of 2001 Year
2006	384	2,100	18.3	282	72.5
2005	377	2,124	17.7	228	58.6
2004	342	2,020	16.9	197	50.6
2003	325	1,697	19.2	252	64.8
2002	430	1,980	21.7	332	85.3
2001	469	1,976	23.7	389	100

Feeder Association Loan Guarantee Program Description

Legislative Authority
Local feeder associations are formed under the Co-operatives Act and Regulations. Once a feeder association has been created, it must comply with the Feeder Associations Guarantee Act ("Act") and Regulation. The Act authorizes the Minister of Finance to give guarantees to the financial institutions that lend to the local feeder associations. An Order in Council sets out the maximum amount of the total outstanding liability of the Crown under the loan guarantee program (currently $55 million).

Eligibility
To be eligible for financing under the Feeder Associations Loan Guarantee Program, an individual must be a farmer who is at least 18 years old, resides in Alberta and owns or leases land. Eligible individuals must also be approved by a local feeder association. Click here for a list of the 59 local feeder associations located throughout Alberta.

Member Benefits
The Program provides farmers with a competitive method of financing cattle for growing and finishing purposes. Financing of 100% of the value of the cattle (less 5% pooled security deposit) is provided.

Local associations make their own financial arrangements with their lender regarding interest rate and total loan limit. The government guarantee is commonly 15% of the total amount of financing available to the local association.

New feeder association members can have up to $100,000 worth of livestock purchased by the feeder association on their behalf. After six months, feeder association members are eligible to obtain financing for up to $300,000 worth of livestock.

Feeder Associations Retain Ownership
The local feeder association retains legal ownership of the cattle purchased under the Program. The livestock purchased are fed, managed and ultimately marketed by the individual feeder association member. All cattle financed by the local feeder association must be branded with the split bar brand specific to the local feeder association. Members are responsible for manifesting cattle in the name of the local feeder association at time of sale and ensuring payment is made to the local feeder association to the credit of their individual account. After a member's account is paid in full, all surplus funds are paid to the member.

Feeder Associations Supervise Loans
In each feeder association, a Board of Directors approves and monitors loans to individual members. Each board hires a Supervisor to work with members and a Secretary/Treasurer to administer loans and maintain financial records.

The contract between the individual feeder association member and the local feeder association is for a term of one year or less for feeder steers and heifers and 120 days or less for feeder cows.

Before receiving cattle, individual feeder association members must submit a security deposit of 5% of the value of the contract to their local feeder association. The pooled security deposits amount to significant protection for the lender against loan default.

Agriculture and Food Manages The Program
Alberta Agriculture and Food employs the Provincial Supervisor, Inspection/Investigation Branch, Regulatory Services Division, to manage the program. There are 10 regional inspectors that are assigned to specific local associations. These inspectors are trained in audit/inspection procedures that are designed to minimize risk and protect the association members, the lenders and the government guarantee.

The Manual of Directives and Procedures provides specific instructions to associations and staff regarding proper risk management practices. AF has also developed the Feeder Associations Management System, a web based computer system that allows local associations to more efficiently track inventory, manage loans and provide the Provincial Supervisor with timely reports. AF staff work closely with the provincial umbrella organization (Feeder Associations of Alberta Ltd.) in developing and enforcing proper risk management policies and procedures.

• Update on Policies and Procedures - 1.77 MB PDF

• Establishing vision and direction for the future.
• Assisting with development of program policies and procedures;
• Communication with local associations;
• Marketing the program to the industry at large;
• Liaison with other livestock industry organizations. Establishing vision and direction for the future.