Canadian Agricultural Loans Act (R.S.C., 1985, c. 25 (3rd Supp.))

Short Title

Marginal note:Short title

1 This Act may be cited as the Canadian Agricultural Loans Act.

Interpretation

Marginal note:Definitions

2 In this Act,

farmer

farmer means any individual, partnership, corporation or cooperative association that is or intends to be engaged in farming in Canada;  (agriculteur)

farming

farming means the production of field-grown crops, cultivated and uncultivated, and horticultural crops, the raising of livestock, poultry and fur-bearing animals, the production of eggs, milk, honey, maple syrup, tobacco, fibre, wood from woodlots and fodder crops and the production or raising of any other prescribed thing or animal; (agriculture)

farm products marketing cooperative

farm products marketing cooperative means a cooperative association, incorporated under the laws of Canada or a province for the purpose of processing, distributing or marketing on a cooperative basis the products of farming, with a majority of 50 per cent plus one of members or shareholders that are farmers; (coopérative de commercialisation des produits agricoles)

lender

lender means

• (a) a bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,

• (b) a credit union, caisse populaire or other cooperative credit society that is designated by the Minister on the application of that society as a lender for the purposes of this Act,

• (c) a company within the meaning of the Trust and Loan Companies Act, or a company, society or provincial company within the meaning of the Insurance Companies Act, that is designated by the Minister on the application of that company, society or provincial company as a lender for the purposes of this Act,

• (d) a Province of Alberta Treasury Branch established pursuant to the Treasury Branches Act, chapter T-7 of the Revised Statutes of Alberta 1980, or

• (e) any other organization that is designated by the Minister, with the approval of the Minister of Finance, on the application of that organization as a lender for the purposes of this Act; (prêteur)

loan

loan means a loan in respect of which this Act applies by virtue of section 3; (prêt)

Minister

Minister means the Minister of Agriculture and Agri-Food; (ministre)

prescribed

prescribed means prescribed by regulation. (Version anglaise seulement)

Application

Marginal note:Application

3 This Act applies in respect of

• (a) loans made for a purpose that is described in subsection 4(1) or 6(1); and

• (b) losses sustained by lenders as a result of loans referred to in paragraph (a).

Guaranteed Farm Loans

Marginal note:Payment of lenders’ losses

• 4 (1) Subject to this Act and, in particular, to the conditions set out in subsection (3), the Minister is liable to pay to a lender 95 per cent — or if another percentage of not more than 95 per cent has been fixed by the regulations for the purpose of this subsection, that other percentage — of any loss sustained by it as a result of a loan made by it to a farmer for any of the following purposes in relation to farming in Canada:

  • (a) the purchase of, major repair to or major overhaul of tools, implements, apparatus and machines of any kind not usually affixed to real property;

  • (b) the purchase or installation of, major repair to or major overhaul of

    • (i) implements, apparatus and machinery of any kind usually affixed to real property, or

    • (ii) machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;

  • (c) subject to the regulations, if any, the purchase of livestock, including

    • (i) horses and other equines,

    • (ii) cattle, sheep, goats and other ruminants,

    • (iii) swine, poultry, bees and fur-bearing animals, and

    • (iv) any other prescribed animal;

  • (d) the alteration or improvement of machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;

  • (e) the erection or construction of fencing or works for drainage;

  • (f) the construction, repair or alteration of, or making of additions to, any building or structure on a farm;

  • (g) the purchase of land;

  • (g.1) the purchase of shares in a corporation, of an interest in a partnership, or of a share or membership in a cooperative, if 90 per cent or more of the fair market value of the property of the corporation, the partnership, or the cooperative was attributable to property referred to in this subsection that was used principally in the course of carrying on the business of farming in Canada;

  • (g.2) the purchase of shares in a corporation, of an interest in a partnership or of a share or membership in a cooperative, if 90 per cent or more of the fair market value of the property of the corporation, the partnership, or the cooperative was attributable to shares, an interest in a partnership or memberships in a corporation, partnership or cooperative referred to in paragraph (g.1) or to property referred to in this subsection that was used principally in the course of carrying on the business of farming in Canada;

  • (g.3) the purchase of shares in a corporation, of an interest in a partnership or of a share or membership in a cooperative, if 90 per cent or more of the fair market value of the property of the corporation, the partnership, or the cooperative was attributable to shares, an interest in a partnership or memberships in a corporation, partnership or cooperative referred to in paragraph (g.2) or to property referred to in this subsection that was used principally in the course of carrying on the business of farming in Canada;

  • (h) any other purpose that is prescribed; or

  • (i) the consolidation or refinancing of the debts of the farmer incurred for such purpose described in any of paragraphs (a) to (h) as is prescribed.

• Marginal note:Exclusion of home improvements

  (2) Subsection (1) does not apply in respect of a loan made for the purpose of financing the construction of or improvements to a private dwelling.

• Marginal note:Conditions

  (3) The conditions referred to in subsection (1) are as follows:

  • (a) the loan was made pursuant to an application signed by the farmer in the form established or approved by the Minister, stating the purpose for which the proceeds of the loan were to be expended;

  • (b) if the loan is with respect to property and the regulations prescribe an interest or right that the farmer must hold or intends to hold in that property, the application stated the nature of that interest or right;

  • (c) the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other loans under this Act previously made to the farmer and disclosed in the farmer’s application or of which the lender has knowledge, exceed

    • (i) for all the purposes set out in subsection (1), an aggregate amount of $500,000 or, if another amount has been fixed by the regulations, that other amount, and

    • (ii) for all the purposes set out in paragraphs (1)(a) to (e) and (g.1) to (i), an amount of $350,000 or, if another amount has been fixed by the regulations, that other amount;

  • (d) the loan was repayable in full by the terms thereof

    • (i) in the case of a loan made for the purpose described in paragraph (1)(g), in not more than fifteen years, and

    • (ii) in the case of a loan made for any other purpose, in not more than ten years;

  • (e) no fee, service charge or charge of any kind was by the terms of the loan payable to the lender in respect of the loan as long as the farmer was not in default, other than

    • (i) a prescribed fee or charge,

    • (ii) a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), and

    • (iii) interest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;

  • (f) the repayment of the loan was secured in the prescribed manner;

  • (g) the loan was made on such terms and in accordance with such conditions, in addition to those specified in paragraphs (a) to (f), as were prescribed for loans made for that purpose; and

  • (h) the lender exercised the same care and prudence in granting and administering the loan as it exercises in granting and administering, in the ordinary course of its business, loans in respect of which this Act does not apply.

Marginal note:Principal amount where joint borrowers

• 5 (1) For the purposes of paragraph 4(3)(c), the principal amount of a loan shall, where the loan was made jointly to two or more farmers each of whom held a prescribed interest in a separate farm, be deemed to be, in respect of each of those farmers, an amount equal to the amount obtained by dividing the principal amount of the loan by the number of farmers.

• Marginal note:Amount owing where joint borrowers

  (2) For the purposes of paragraph 4(3)(c), the amount owing in respect of any loan previously made to a farmer shall, where the loan was made jointly to that farmer and one or more other farmers each of whom held a prescribed interest in a separate farm, be deemed to be an amount equal to the amount obtained by dividing the amount owing in respect of that loan by the number of farmers.

Guaranteed Farm Products Marketing Loans

Marginal note:Payment of lenders’ losses

• 6 (1) Subject to this Act and, in particular, to the conditions set out in subsection (2), the Minister is liable to pay to a lender 95 per cent — or if another percentage of not more than 95 per cent has been fixed by the regulations for the purpose of this subsection, that other percentage — of any loss sustained by it as a result of a loan made by it to a farm products marketing cooperative for any of the following purposes in relation to the processing, distribution or marketing in Canada of the products of farming:

  • (a) the purchase of land;

  • (b) the purchase or construction of any building or structure;

  • (c) the repair or alteration of, or making of additions to, any building or structure;

  • (d) the purchase or repair of machinery or apparatus; or

  • (e) the consolidation or refinancing of the debts of the cooperative incurred for such purpose described in any of paragraphs (a) to (d) as is prescribed.

• Marginal note:Conditions

  (2) The conditions referred to in subsection (1) are as follows:

  • (a) the loan was made pursuant to an application signed by the farm products marketing cooperative in the form established or approved by the Minister stating the purpose for which the proceeds of the loan were to be expended;

  • (b) the application stated that 50 per cent plus one of the members or shareholders, as the case may be, of the farm products marketing cooperative are farmers and, if the loan is with respect to property and the regulations prescribe an interest or right that the cooperative must hold in that property, the application stated the nature of that interest or right;

  • (c) the principal amount of the loan did not at the time of the making of the loan, together with the amount owing in respect of other loans previously made to the farm products marketing cooperative and disclosed in the cooperative’s application or of which the lender has knowledge, exceed

    • (i) for all the purposes set out in subsection (1), an aggregate amount of $500,000 or, if another amount has been fixed by the regulations or any greater amount approved by the Minister pursuant to subsection (3), that other amount, and

    • (ii) for all the purposes set out in paragraphs (1)(d) and (e), an amount of $350,000 or, if another amount has been fixed by the regulations or any greater amount approved by the Minister pursuant to subsection (3), that other amount;

  • (d) the loan was repayable in full by the terms thereof

    • (i) in the case of a loan made for the purpose described in paragraph (1)(a) or (b), in not more than twenty years, and

    • (ii) in the case of a loan made for any other purpose, in not more than ten years;

  • (e) no fee, service charge or charge of any kind was by the terms of the loan payable to the lender in respect of the loan as long as the farm products marketing cooperative was not in default, other than

    • (i) a prescribed fee or charge,

    • (ii) a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), and

    • (iii) interest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;

  • (f) the repayment of the loan was secured in the prescribed manner;

  • (g) the loan was made on such terms and in accordance with such conditions, in addition to those specified in paragraphs (a) to (f), as were prescribed for loans made for that purpose; and

  • (h) the lender exercised the same care and prudence in granting and administering the loan as it exercises in granting and administering, in the ordinary course of its business, loans in respect of which this Act does not apply.

• Marginal note:Minister may increase limits

  (3) The Minister may, on the application of a lender made before the granting of a loan, approve an increase in each of the monetary limits referred to in paragraph (2)(c) to an aggregate amount not exceeding $3 million or, if another amount has been fixed by the regulations for the purpose of this subsection, that other amount.

Limitation of Minister’s Liability

Marginal note:Aggregate limit

7 The Minister is not liable under this Act to make any payment to a lender in respect of any loss sustained by it as a result of a loan made by it during a fiscal year after the aggregate principal amount of the loans under this Act made during that fiscal year and the four preceding fiscal years by all lenders exceeds $3 billion, or if another amount has been fixed by the regulations for the purpose of this section, that other amount.

Marginal note:Limit re lender

8 The Minister is not liable under this Act to pay to a lender in respect of losses sustained by it as a result of loans made by it during a fiscal year and the four preceding fiscal years a total amount in excess of

• (a) ninety per cent of that part of the aggregate principal amount of the loans made by it during that fiscal year and the four preceding fiscal years that does not exceed one million dollars;

• (b) fifty per cent of that part of the aggregate principal amount of the loans made by it during that fiscal year and the four preceding fiscal years that exceeds one million dollars but does not exceed two million dollars; and

• (c) ten per cent of that part of the aggregate principal amount of the loans made by it during that fiscal year and the four preceding fiscal years that exceeds two million dollars.