Evaluation of the Canadian Agricultural Loans Act Program - Summary
About the Evaluation
- This evaluation reports on its relevance, design and delivery, and performance of the Canadian Agricultural Loans Act (CALA) Program, focusing on results achieved from April 1, 2013 to March 31, 2018.
- Multiple lines of evidence were utilized, including: document and literature review, performance data analysis, comparative review of other available programs, interviews, and surveys of financial lenders and farmers.
The Canadian Agricultural Loans Act Program
- Legislated under the authority of the CALA, the Program aims to increase the availability and accessibility of private sector loans to farmers and agricultural cooperatives through federal loan guarantees.
- Farmers can use CALA loans for farm capital and land, while agricultural cooperatives may access loans to process, distribute, or market farming products.
- Under the Program, registered lenders issue loans up to $500,000 for farmers and up to $3 million for cooperatives.
- The Minister of Agriculture and Agri-Food guarantees 95 percent of a net loss sustained by registered lenders on CALA loans.
What We Found
- The CALA Program provides access to affordable credit, notably for new and niche farmers, but the current loan terms limit farmers’ ability to meet their capital investment needs.
- While the Program aligns with AAFC priorities regarding primary agriculture, and helps to grow the middle class, it does not align with AAFC priorities related to agri-foods as it excludes individual farmers from obtaining capital loans for non-primary agriculture, that is off-farm agri-food processing.
- The CALA Program aligns with federal roles and responsibilities by providing Canadian farmers equal access to affordable credit while sharing the risks and opportunities of agricultural debt with the private sector.
- The CALA Program fills the provincial and sector gaps in credit accessibility by complementing and supplementing existing programs.
Design and Delivery
- The CALA Program’s design and delivery model offers benefits such as lender expertise, speed of business, and loan guarantees. However, the Program’s criteria, such as loan limits, fees, and eligibility affect overall effectiveness.
- The CALA Program exceeded its targets for beginning farmers but did not meet its targets for existing farmers or cooperatives.
- The Program contributes to the sustainability of an aging and consolidating agriculture sector, and further contributes to beginning farmers (Figure 1).
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|Year||Total dollar value for existing farmers||Average loan value for existing farmers||Total dollar value for beginning famers||Average loan value for beginning farmers|
Source: CALA Program Administrative Data
- The Program’s logic model and performance measurements do not accurately reflect its activities and purposes.
- The Program administration is cost neutral.
Recommendation 1: The Assistant Deputy Minister, Programs Branch, should explore and revise, as appropriate, the CALA Program parameters to ensure that the availability of private sector loans support farm productivity, competitiveness and sustainability.
Recommendation 2: The Assistant Deputy Minister, Programs Branch, should revise the CALA Program’s logic model and performance measurements to better reflect the delivery model.
Management Response: Management has agreed to explore options to adjust Program parameters to increase the availability of CALA loans, and update the logic model to better reflect the delivery model by March 31, 2020. These actions will be conducted in conjunction with the 2019 legislative review.
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