Lending Policy Change Opens Door for New Hog Barn Construction

Farmscape for April 22, 2016

The manager of sustainable development with Manitoba Pork says a change by Farm Credit Canada will make it easier for swine producers to qualify for financing the construction of for new hog production facilities.
The first applications for permits to build new swine barns in Manitoba under the "Pig Production Special Pilot Project Evaluation Protocol," have come in and additional applications are expected.
Mike Teillet, the manager of sustainable development with Manitoba Pork, says up until about 3 months ago, when Farm Credit Canada announced it would allow 65 percent loans based on new construction, qualifying for financing had been a real challenge.

Clip-Mike Teillet-Manitoba Pork:
The cost, that's a difficult issue.
Part of the problem is we hadn't really seen any new construction over the last probably 7 or 8 years so it was difficult to know what the costs were going to be.
We heard all sorts of estimates so finally we went out ourselves and contracted with an engineering company to do a very detailed cost estimate on what the prices would be to build a barn.
They gave us 2 estimates, 1 on a 2,000 space finisher and 1 on a 4,000 space finisher.
Right now it appears that a 2,000 space barn would probably cost somewhere in the area of let's say 1.1 to about 1.5 million.
A 4,000 space barn would probably be somewhere in the neighborhood of 2 million.
These are fairly rough estimates but somewhere in that neighborhood.

Teillet says the decision by FCC to provide 65 percent loans based on new construction was a huge turning point.
He says prior to that the financial institutions would only give loans based on current value of barns and, because the value older barns since we hadn't any new ones is quite a bit lower than the new construction costs, that was a real barrier.
For Farmscape.Ca, I'm Bruce Cochrane.


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