Records show a federal debt mediation program, which is rarely used and assists only a small number of farmers, costs taxpayers nearly $11,000 per application.According to Blacklock’s Reporter, auditors raised concerns about the effectiveness and value of the Farm Debt Mediation Service.“The cost of service delivery is increasing,” said the department of agriculture audit. Costs to process applications averaged $10,731 each. The costs of applications approved for mediation averaged $14,519 each.In 1997, Parliament passed the Farm Debt Mediation Act to provide free guidance to financially troubled farmers and their creditors before resorting to bankruptcy court proceedings. Auditors noted farmers had various alternatives available, including mediation through banks, credit unions, lawyers and licensed insolvency trustees.Out of 191,000 farmers across the country, as few as 170 per year sought federal mediation, according to the Evaluation of the Farm Debt Mediation Service. Additionally, according to the most recent available data, only 23 farmers filed for bankruptcy in 2020.“The rate of bankruptcy for farms is consistently lower than the rate of bankruptcy in the overall Canadian economy,” said Evaluation.“The Farm Debt Mediation Service has seen a decline in usage over a 10-year period to less than half the number of users,” wrote auditors. Figures over the decade from 2011 to 2021 showed “the proportion of farms using the Farm Debt Mediation Service is very low and decreasing,” they said.Nationwide, less than 0.2% of farmers sought assistance from federal mediators, with Western ranchers having a rate as low as 0.08%. Auditors pointed out during this period, the federal agency retained 14 full-time employees and had an annual budget of $2.5 million.Evaluation said while “there is a need for financial counselling type services for farmers having difficulty meeting their financial obligations,” the value of the federal program was unclear. “There is no systematic follow-up with farmers who used the Farm Debt Mediation Service,” it said.“As such, there remains uncertainty about some outcomes of the program,” wrote auditors. “For example, the contribution of the Farm Debt Mediation Service to a diminished likelihood of financial default is not clear.”Auditors pointed out in Saskatchewan, where more than a third of Canada's farmland is located, a 1944 Farm Security Act requires creditors to go through a lengthy mediation process before foreclosing on farms.A similar Family Farm Protection Act introduced in Manitoba was suspended in 2021 “due to low usage.”“There have been very few farm bankruptcies,” wrote auditors. “The agriculture sector is financially resilient.”
Records show a federal debt mediation program, which is rarely used and assists only a small number of farmers, costs taxpayers nearly $11,000 per application.According to Blacklock’s Reporter, auditors raised concerns about the effectiveness and value of the Farm Debt Mediation Service.“The cost of service delivery is increasing,” said the department of agriculture audit. Costs to process applications averaged $10,731 each. The costs of applications approved for mediation averaged $14,519 each.In 1997, Parliament passed the Farm Debt Mediation Act to provide free guidance to financially troubled farmers and their creditors before resorting to bankruptcy court proceedings. Auditors noted farmers had various alternatives available, including mediation through banks, credit unions, lawyers and licensed insolvency trustees.Out of 191,000 farmers across the country, as few as 170 per year sought federal mediation, according to the Evaluation of the Farm Debt Mediation Service. Additionally, according to the most recent available data, only 23 farmers filed for bankruptcy in 2020.“The rate of bankruptcy for farms is consistently lower than the rate of bankruptcy in the overall Canadian economy,” said Evaluation.“The Farm Debt Mediation Service has seen a decline in usage over a 10-year period to less than half the number of users,” wrote auditors. Figures over the decade from 2011 to 2021 showed “the proportion of farms using the Farm Debt Mediation Service is very low and decreasing,” they said.Nationwide, less than 0.2% of farmers sought assistance from federal mediators, with Western ranchers having a rate as low as 0.08%. Auditors pointed out during this period, the federal agency retained 14 full-time employees and had an annual budget of $2.5 million.Evaluation said while “there is a need for financial counselling type services for farmers having difficulty meeting their financial obligations,” the value of the federal program was unclear. “There is no systematic follow-up with farmers who used the Farm Debt Mediation Service,” it said.“As such, there remains uncertainty about some outcomes of the program,” wrote auditors. “For example, the contribution of the Farm Debt Mediation Service to a diminished likelihood of financial default is not clear.”Auditors pointed out in Saskatchewan, where more than a third of Canada's farmland is located, a 1944 Farm Security Act requires creditors to go through a lengthy mediation process before foreclosing on farms.A similar Family Farm Protection Act introduced in Manitoba was suspended in 2021 “due to low usage.”“There have been very few farm bankruptcies,” wrote auditors. “The agriculture sector is financially resilient.”
