October 3, 2012 / 2:53 PM / 5 years ago

Canada lender offers flexibility to embattled hog farmers

WINNIPEG, Manitoba (Reuters) - Government-backed Farm Credit Canada, the country's largest farm lender, said it is willing to adjust or defer hog farmers' loan payments, as they struggle to absorb mounting losses triggered by high feed costs.

Regina, Saskatchewan-based FCC said on Wednesday that it would contact all of its hog farming clients to find ways to help them through a "short-term cash flow problem".

A severe drought in the United States has decimated crops, leading to higher costs for feed grains and pushing North American hog farmers into steep losses. The problem is compounded as hog farmers reduce the size of their herds, creating a glut of pork and pressuring hog prices.

Last month, Canada's second-biggest hog farm operation, Big Sky Farms, entered receivership and another major hog farmer, Manitoba-based Puratone, received protection from creditors.

Farmers complain that lenders have reduced the availability of credit, which they say they need to stay in business into next spring. Hog prices are expected to rise at that time.

An FCC official confirmed to Reuters last month that credit availability to farmers had dropped as hog prices fell.

In August, BMO Financial Group said it would offer U.S. and Canadian farmer customers drought relief, such as more access to capital, fee concessions, working lines of credit and loan deferrals.

Reporting by Rod Nickel; Editing by Dale Hudson

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