An Act to increase the availability of loans for the purpose of the establishment, improvement and development of farms and the processing, distribution or marketing of the products of farming by cooperative associationsCanadian Agricultural Loans ActCanadian Agricultural Loans20196
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F-2.725 (3rd Supp.)1985[1987, c. 31, assented to 30th June, 1987]Short Title
Short titleThis Act may be cited as the Canadian Agricultural Loans Act.R.S., 1985, c. 25 (3rd Supp.), s. 1; 2009, c. 15, s. 2
Interpretation
DefinitionsIn this Act,farmer means any individual, partnership, corporation or cooperative association that is or intends to be engaged in farming in Canada;  (agriculteur)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 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 meansa bank or an authorized foreign bank within the meaning of section 2 of the Bank Act,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,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,a Province of Alberta Treasury Branch established pursuant to the Treasury Branches Act, chapter T-7 of the Revised Statutes of Alberta 1980, orany 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 means a loan in respect of which this Act applies by virtue of section 3; (prêt)Minister means the Minister of Agriculture and Agri-Food; (ministre)prescribed means prescribed by regulation. (Version anglaise seulement)R.S., 1985, c. 25 (3rd Supp.), s. 2; 1991, c. 47, s. 727; 1994, c. 38, s. 25; 1999, c. 28, s. 162; 2009, c. 15, s. 3
Application
ApplicationThis Act applies in respect ofloans made for a purpose that is described in subsection 4(1) or 6(1); andlosses sustained by lenders as a result of loans referred to in paragraph (a).
Guaranteed Farm Loans
Payment of lenders’ lossesSubject 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:the purchase of, major repair to or major overhaul of tools, implements, apparatus and machines of any kind not usually affixed to real property;the purchase or installation of, major repair to or major overhaul ofimplements, apparatus and machinery of any kind usually affixed to real property, ormachinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;subject to the regulations, if any, the purchase of livestock, includinghorses and other equines,cattle, sheep, goats and other ruminants,swine, poultry, bees and fur-bearing animals, andany other prescribed animal;the alteration or improvement of machinery and apparatus for the generation or distribution of electricity, whether or not affixed to real property;the erection or construction of fencing or works for drainage;the construction, repair or alteration of, or making of additions to, any building or structure on a farm;the purchase of land;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;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;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;any other purpose that is prescribed; orthe consolidation or refinancing of the debts of the farmer incurred for such purpose described in any of paragraphs (a) to (h) as is prescribed.Exclusion of home improvementsSubsection (1) does not apply in respect of a loan made for the purpose of financing the construction of or improvements to a private dwelling.ConditionsThe conditions referred to in subsection (1) are as follows: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;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;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, exceedfor 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, andfor 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;the loan was repayable in full by the terms thereofin the case of a loan made for the purpose described in paragraph (1)(g), in not more than fifteen years, andin the case of a loan made for any other purpose, in not more than ten years;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 thana prescribed fee or charge,a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), andinterest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;the repayment of the loan was secured in the prescribed manner;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; andthe 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.R.S., 1985, c. 25 (3rd Supp.), s. 4; 2009, c. 15, s. 5
Principal amount where joint borrowersFor 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.Amount owing where joint borrowersFor 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.R.S., 1985, c. 25 (3rd Supp.), s. 5; 2009, c. 15, s. 6
Guaranteed Farm Products Marketing Loans
Payment of lenders’ lossesSubject 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:the purchase of land;the purchase or construction of any building or structure;the repair or alteration of, or making of additions to, any building or structure;the purchase or repair of machinery or apparatus; orthe consolidation or refinancing of the debts of the cooperative incurred for such purpose described in any of paragraphs (a) to (d) as is prescribed.ConditionsThe conditions referred to in subsection (1) are as follows: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;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;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, exceedfor 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, andfor 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;the loan was repayable in full by the terms thereofin the case of a loan made for the purpose described in paragraph (1)(a) or (b), in not more than twenty years, andin the case of a loan made for any other purpose, in not more than ten years;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 thana prescribed fee or charge,a charge not exceeding the amount of the fee payable by the lender pursuant to paragraph 12(1)(b), andinterest at a rate not exceeding the prescribed rate or the rate determined by the prescribed formula or formulae;the repayment of the loan was secured in the prescribed manner;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; andthe 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.Minister may increase limitsThe 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.R.S., 1985, c. 25 (3rd Supp.), s. 6; 2009, c. 15, s. 7
Limitation of Minister’s Liability
Aggregate limitThe 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.R.S., 1985, c. 25 (3rd Supp.), s. 7; 1995, c. 13, s. 1; 2009, c. 15, s. 8
Limit re lenderThe 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 ofninety 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;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; andten 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.
Limit re appraised valueThe Minister is not liable under this Act to make any payment to a lender in respect of that portion of the loss sustained by it as a result of a loan that exceedsin the case of a farmer who, on the date of a loan application referred to in paragraph 4(3)(b) or 6(2)(b), intends to be or has been engaged in farming in Canada for less than six years, 90 per cent — or if another percentage of not more than 90 per cent has been fixed by the regulations for the purpose of this paragraph, that other percentage — of the appraised value, determined as of the day the loan is made, of the property in respect of which the loan is made; andin the case of any other farmer, 80 per cent — or if another percentage of not more than 80 per cent has been fixed by the regulations for the purpose of this paragraph, that other percentage — of that value.R.S., 1985, c. 25 (3rd Supp.), s. 9; 2009, c. 15, s. 9
[Repealed, 2009, c. 15, s. 9]
Exception where risk increasedThe 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 where, after the loan is made, the farmer or farm products marketing cooperative and the lender enter into an arrangement or agreement, whether or not it alters or revises the terms or conditions of that loan, that might increase the risk that the loan will not be repaid according to its terms, unless the Minister approves the arrangement or agreement before it is entered into.
Compliance requiredThe 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 unlessthe lender has complied with the regulations made pursuant to this Act; andthe lender has, at such time as is prescribed, paid to the Minister a fee of one-half of one per cent of the amount of the loan or such other fee as is prescribed or calculated in the manner prescribed.Partial refund of feeWhere a lender advances less than three quarters of the amount of a loan to a farmer or farm products marketing cooperative, the Minister may, on application by the lender made within one year after the first instalment of the loan was advanced, refund to the lender that portion of the fee paid pursuant to paragraph (1)(b) that is attributable to the unadvanced portion of the loan.
Legal feesThe Minister is not liable to pay the portion of a loss sustained by a lender that is attributable to legal fees, costs or disbursements incurred by the lender unless those fees, costs or disbursements are assessed in accordance with the rates established by the Minister in consultation with the Minister of Justice.R.S., 1985, c. 25 (3rd Supp.), s. 13; 2009, c. 15, s. 10
Termination of operation of sections 4 and 6The Minister may, with the approval of the Governor in Council, by notice to a lender terminate the operation of section 4 or 6 in respect of loans made for any purpose, such termination to be effective after a time set out in the notice, and the Minister is not liable under this Act to make any payment to the lender in respect of any loan made for that purpose by the lender after that time.When notice of termination effectiveA notice given to a lender under subsection (1) is not effective unless the time of termination set out therein is at least twenty-four hours after receipt of the notice at the head office of the lender.
Regulations and Orders
RegulationsThe Governor in Council may, on the recommendation of the Minister and the Minister of Finance, make regulationsdefining for the purposes of this Act “repair”, “alteration”, “additions”, “major”, in relation to “repair” and “overhaul”, and “works for drainage”;prescribing, in respect of loans made for any purpose,the security to be taken by the lender for the repayment of loans made for that purpose,the terms of repayment and other terms, including provisions in respect of insurance, on which loans made for that purpose are to be made, andthe maximum rate of interest payable by a farmer or farm products marketing cooperative or the manner of determining that maximum rate;prescribing, for the purposes of paragraph 4(1)(c), the purpose for which the livestock is kept or the minimum period that the livestock must remain in the possession of the farmer;fixing percentages for the purposes of subsections 4(1) and 6(1) and paragraphs 9(a) and (b);fixing amounts for the purposes of paragraphs 4(3)(c) and 6(2)(c), subsection 6(3) and section 7;prescribing that in the event of actual or impending default in the repayment of a loan the lender may, with the approval of the Minister and the farmer or farm products marketing cooperative, alter or revise by way of an extension of time or otherwise any of the terms of the loan, or any agreement in connection therewith, and that an alteration or revision shall not discharge the liability of the Minister in respect thereof under this Act;prescribing, in the event of default in the repayment of a loan, the legal or other measures to be taken by the lender and the procedure to be followed for the collection of the amount of the loan outstanding and the disposal or realization of any security for the repayment thereof held by the lender;prescribing the method of determination of the amount of loss sustained by a lender as a result of a loan;prescribing the procedure to be followed by a lender in making a claim for any loss sustained by it as a result of a loan;prescribing the steps to be taken by a lender to effect collection on behalf of the Minister of any loan in respect of which any payment has been made by the Minister to the lender under this Act and providing that, in the event of neglect by the lender to take such steps, the amount of the payment may be recovered by the Minister;prescribing the information to be furnished to the Minister by a lender in respect of loans made by it and the time when the information is to be furnished;prescribing any thing that is by this Act to be prescribed; andgenerally for carrying out the purposes and provisions of this Act.[Repealed, 2009, c. 15, s. 11]R.S., 1985, c. 25 (3rd Supp.), s. 15; 1992, c. 1, s. 67; 2009, c. 15, s. 11
[Repealed, 1992, c. 1, s. 146]
Offences and Punishment
False statements or misuse of loanEvery person who makes a statement in an application for a loan that is false in any material respect or who uses the proceeds of a loan for a purpose other than that stated in that person’s application is guilty of an offence and liable on summary conviction to a fine of not more than two thousand dollars.PenaltyWhere a person is convicted of an offence under subsection (1), there shall be imposed on that person, in addition to any fine, a penalty equal to such amount of the loan made to that person in respect of which the offence was committed as has not been repaid by him, with interest thereon to the date of the conviction.Payment to lender or Receiver GeneralThe penalty referred to in subsection (2) shall be paid to the lender by which the loan was made or, if payment has been made by the Minister to the lender in respect of the loan under this Act, the penalty shall be paid to the Receiver General, and payment of the penalty discharges the liability of the person to repay the loan.Limitation periodProceedings in respect of an offence under this section may be commenced at any time within twelve months after the day on which evidence, sufficient in the opinion of the Minister to justify prosecution for the offence, comes to the Minister’s knowledge, but may not be commenced later than three years after the time the subject-matter of the proceedings arose.CertificateFor the purposes of subsection (4), a document purporting to have been issued by the Minister, certifying the day on which the evidence referred to in that subsection came to the knowledge of the Minister, shall be received in evidence as conclusive proof of that fact without proof of the signature or official character of the person appearing to have signed the document and without further proof.
General
Minister may establish or approve formsThe Minister may establish or approveforms of application for loans; andforms of notes, agreements, certificates and other documents to be used in connection with loans or necessary or advisable for the effective operation of this Act.
Minister subrogated in lender’s rightsWhere under this Act the Minister has paid to a lender the amount of any loss sustained by the lender as a result of a loan, the lender shall execute a receipt in favour of the Minister in the form established or approved by the Minister and the Minister is thereupon subrogated in all rights of the lender in respect of the loan.IdemWithout limiting the generality of subsection (1), the subrogation mentioned in that subsection vests in the Minister all rights and powers of the lender in respect of the loan, any judgment concerning the loan obtained by the lender and any security taken by the lender for the repayment of the loan, and the Minister is entitled to exercise all the rights, powers and privileges that the lender had or might exercise in respect of the loan, judgment or security, including the right to commence or continue any action or proceeding, to execute any release, transfer, sale or assignment or in any way to collect, realize or enforce the loan, judgment or security.Receipt evidence of paymentAny document purporting to be a receipt in the form approved by the Minister and purporting to be signed on behalf of the lender is evidence of the payment by the Minister to the lender under this Act in respect of the loan therein mentioned and of the execution of that document on behalf of the lender.
Repossession and disposal of securitiesThe Minister may enter into an agreement on such terms and conditions as the Minister may deem advisable with a lender or with any person engaged in the manufacture or distribution of tools, implements, apparatus, machinery or machines, whether or not of a kind that is usually affixed to real property, or of any supplies or materials that may be utilized in the making of any improvements to a farm or farm products marketing cooperative pursuant to a loan, or with both any such lender and any such person, to provide for the repossession or disposal of any property on which security is taken by the lender for the repayment of a loan.
Payments out of C.R.F.Any amount payable by the Minister to a lender under this Act and any amount necessary to meet the expenses incurred in the administration of this Act may be paid out of the Consolidated Revenue Fund.
Annual reportThe Minister shall, not later than June 30 in each year, prepare a report with respect to the administration of this Act during the fiscal year that ended on the preceding March 31 and shall cause a copy of the report to be laid before each House of Parliament on any of the first 15 days on which that House is sitting after the day the Minister completes it.R.S., 1985, c. 25 (3rd Supp.), s. 22; 2009, c. 15, s. 12
Five-year reviewEvery five years after the coming into force of this subsection, the Minister shall review the provisions and administration of this Act in consultation with the Minister of Finance.Tabling of reportThe Minister shall cause a copy of the report on the review to be laid before each House of Parliament on any of the first 30 days on which that House is sitting after the report is completed.2009, c. 15, s. 12
Related Amendments
[Amendments]
Consequential Amendments
[Amendments]
Coming into Force
Coming into forceThis Act, other than sections 1 and 22 to 25, shall come into force on a day to be fixed by proclamation.[Note: Act, other than sections 1 and 22 to 25, in force February 1, 1988, see SI/88-31.]IdemSections 1 and 22 to 25 shall come into force or be deemed to have come into force on July 1, 1987.