A federal program meant to help struggling farmers avoid insolvency is seeing little use despite rising farm debt, with millions spent annually on administration, according to a Department of Agriculture audit.The Evaluation of the Farm Debt Mediation Service found the program has had low uptake across the country, even as financial pressures on farmers intensify.“Program expenditures have exceeded budget allocations year over year driven mainly by professional service and travel expenditures which represent more than half the program budget,” the report said. The program spent $3.8 million last year, largely on administrative costs.Auditors pointed to limited outreach as a key reason for the lack of participation. “Limited outreach with established farmer and creditor networks resulted in low program awareness amongst farmers at risk of financial difficulties,” the report said, adding the service remains underused, particularly among smaller farms and in certain regions and commodities.The findings come as farm debt increased 14% in 2024, the largest annual jump since 1981. Auditors said stakeholders warned the growing debt burden is affecting not only farmers and lenders but also regional economies.The mediation service traces its origins to the 1934 Farmers’ Creditors Arrangement Act and offers free financial counselling and mediation between farmers and creditors..Over the past five years the program received 1,175 applications, with 95% approved.A previous 2023 audit found the program cost taxpayers about $14,519 per approved application, with overall service delivery costs continuing to rise.Nationwide, fewer than 0.2% of farmers used the service, with participation among Western ranchers as low as 0.08%. Despite this, the program maintains between 10 and 14 full-time employees to process applications.Auditors also raised concerns about the program’s effectiveness, noting there is no consistent follow-up with participants.“As such there remains uncertainty about some outcomes of the program,” the report said. “For example the contribution of the Farm Debt Mediation Service to a diminished likelihood of financial default is not clear.”The report noted some provinces already have similar protections. Saskatchewan’s Farm Security Act requires mediation before foreclosure, while Manitoba’s Family Farm Protection Act was suspended in 2021 due to low usage.“There have been very few farm bankruptcies,” auditors wrote. “The agriculture sector is financially resilient.”
