Evaluation of the Farm Debt Mediation Service, 2025

Abbreviations

AAFC

Agriculture and Agri-Food Canada

ADM

Assistant Deputy Minister

BIA

Bankruptcy and Insolvency Act

FDMA

Farm Debt Mediation Act

FDMS

Farm Debt Mediation Service

FLSB

Farm Land Security Board

NOI

Notice of Intent

PIP

Performance Information Profile

RTP

Report to Parliament

Executive summary

Purpose

The Office of Audit and Evaluation at Agriculture and Agri-Food Canada (AAFC) conducted an evaluation of the Farm Debt Mediation Service (FDMS) to assess its relevance, design, delivery, efficiency and effectiveness.

Scope and methodology

The evaluation covered activities from 2021‑2022 to 2024‑2025 and used multiple lines of evidence including a document and program file review, a literature review, efficiency analysis, key informant interviews and an analysis of primary and secondary data.

Background

FDMS is a federal service administered by AAFC under the authority of the Farm Debt Mediation Act (FDMA). The program provides free financial consultation and mediation services to farmers who are at risk of, or experiencing, insolvency and financial difficulties. The program offers two options, section 5(1)(a) which provides applicants with a stay of proceedings to protect assets during consultation and mediation, and section 5(1)(b) which provides only financial consulting and mediation services, without a stay of proceedings.

Findings

• FDMS responds to a gap in the Canadian agricultural sector for farm debt consultation and mediation services through the use of contractors with agricultural expertise.
• Limited outreach with established farmer and creditor networks resulted in low program awareness amongst farmers at risk of financial difficulties.
• FDMS's standing offer model is a design strength, preserving the farmer-creditor relationship by facilitating mutually acceptable financial agreements.
• Program expenditures have exceeded budget allocations year over year, driven mainly by professional service and travel expenditures, which represent more than half of the program's budget.
• FDMS salary costs declined due to management streamlining. However, limitations in the two information management systems created bottlenecks in process efficiency.
• The program met most of its outcomes, temporarily protecting farmer assets, helping farmers and creditors gain a greater understanding of their financial situations and improving farm viability through mediated agreements.

Conclusion

Canadian farmers continue to face challenges that threaten the financial viability of their operations and increase farm debt. FDMS plays a unique role in addressing a gap in farm debt support in the agricultural sector. That said, the program is underused, particularly among smaller farms and in certain commodities and regions across Canada. Accessing FDMS earlier could improve outcomes for farmers struggling with farm debt, but current outreach efforts do not leverage existing farmer or creditor networks that are well positioned to reach farmers in need of financial support. FDMS benefits from a strong program design inherent in its standing offer model for contractors who deliver financial consulting and mediation services specific to the agricultural sector. Although salary costs have declined when compared to the previous 5‑year period, process inefficiencies (bottlenecks) recur in the FDMS client journey due to multiple data systems for case management and limited automation. Finally, FDMS's funding structure (budgeting of professional services and travel) introduces a vulnerability to program delivery and could impact its responsiveness during times of increased demand. Addressing these issues will help ensure the program continues to meet its legislative mandate.

Recommendations

• Recommendation 1: The Assistant Deputy Minister (ADM) of Programs Branch, in consultation with Public Affairs Branch, should develop a FDMS promotional strategy which includes national producer associations and key financial organizations to improve program awareness amongst Canadian farmers.
• Recommendation 2: The ADM of Programs Branch, in consultation with Information Systems Branch, should seek opportunities for low cost but meaningful improvements to FDMS data systems.
• Recommendation 3: The ADM of Programs Branch and ADM Corporate Management Branch should review and implement an approach that addresses the financial sustainability of the FDMS.

Management response and action plan

Management agrees with the evaluation recommendations and has developed an action plan to address them by September 2026. For further details see Annex D.

1.0 Introduction

The Office of Audit and Evaluation (OAE) at Agriculture and Agri-Food Canada (AAFC) conducted an evaluation of the Farm Debt Mediation Service (FDMS or the program) as part of the 2024‑2025 to 2028‑2029 Integrated Audit and Evaluation Plan. This evaluation is intended to inform the upcoming parliamentary review of FDMS in 2025‑2026.

2.0 Scope and methodology

The evaluation assessed the relevance, design, delivery, efficiency and effectiveness of FDMS activities from 2021‑2022 to 2024‑2025. This evaluation used multiple lines of evidence, including a document, literature and program file review, efficiency analysis, key informant interviews and an analysis of primary and secondary data. For a detailed methodology, see Annex A.

3.0 Program profile

The FDMS is a federal service administered by AAFC under the authority of the Farm Debt Mediation Act (FDMA), which came into force in 1998. The program offers free support to farmers who are struggling to meet their financial obligations. Services include financial counselling and mediation which brings farmers and their creditors together with a mediator in a neutral forum to reach a mutually acceptable solution.^{note 1} Participation is voluntary and the process is private and confidential.

To be eligible for the program, applicants must operate a commercial farm and be insolvent or at risk of becoming insolvent. This means they are, or will be, unable to make debt payments on time, have stopped making payments or have debts exceeding the total value of their property, if sold.

FDMS offers two options:

• Financial counselling and mediation with a stay of proceedings through section 5(1)(a) of the FDMA: This option includes a temporary halt on legal actions by creditor(s) while mediation is ongoing.
• Financial counselling and mediation without a stay of proceedings through section 5(1)(b) of the FDMA: This option does not include a halt on legal actions by creditor(s) but provides a platform for mediation between the farmer and their creditor(s).

Section 5(1)(a) is available to farmers who are facing serious financial pressure. This includes those who received a Notice of Intent (NOI) by a secured creditor of debt recovery actions and believe their assets are at risk of being seized. The stay of proceedings provided by FDMS prevents creditors from starting or continuing any legal action to seize property or enforce security against the farmer. The initial stay lasts 30 days and can be extended a maximum of three times for a total of 120 days. Both secured and unsecured creditors are notified when a section 5(1)(a) process begins.^{note 2} Section 5(1)(b) is designed for farmers who are insolvent and expect to face financial difficulties but who have not received a NOI from a secured creditor or any other formal recovery notice. Unlike section 5(1)(a), this process does not include a stay of proceedings to restrict creditor action during the consultation and mediation process.

A farming operation cannot apply to the same FDMS section more than once within a 2‑year period. However, farmers may apply under the other section during that time without restriction. Under both sections, applicants are supported by qualified financial experts throughout the mediation process. Financial experts work with farmers to prepare detailed financial statements and to develop a recovery plan tailored to their situation. Once the financial statement and recovery plan are complete, a mediator arranges a meeting between the farmer and their creditor(s) to negotiate a mutually acceptable agreement.

3.1 Governance

FDMS is managed by AAFC through the Business Development and Competitiveness Directorate within the Farm Investment and Assistance Division. Program staff in two regional offices are responsible for reviewing applications, issuing stays of proceedings, assigning financial experts and mediators and assisting in planning the logistics of mediation meetings. Financial consultation and mediation services are delivered via private-sector contractors who hold standing offers with AAFC. These contractors are selected through a competitive procurement process approved by the department. The fees paid to financial experts and mediators by AAFC are fixed and set out in the terms of the standing offer.

3.2 Resources

Table 1 summarizes total FDMS expenditures over the evaluation period, which amounted to $10.7 million between 2021‑2022 and 2024‑2025. This total includes salary and employee benefits costs for AAFC staff, as well as non-pay operating costs for contracted financial experts and mediators who delivered program activities. On average, the program was supported by 10 full time equivalent positions per year.

3.3 Intended outcomes

Intended outcomes of the program are presented below. Annex B presents more detailed information on FDMS outcome indicators, data sources and performance targets as listed in the Performance Information Profile (PIP).

Immediate outcomes

• Farmers' assets are temporarily protected
• Farmers have a greater understanding of their financial situation
• Creditors have a greater understanding of the clients' financial situation

Intermediate outcomes

• Farmers are implementing activities to reduce debt and/or increase revenue
• Creditors are suspending collection actions
• Increased agreement between insolvent farmers and their creditors on financial recovery measures
• Farmers are advancing their personal and business goals

Ultimate outcome

• The agricultural sector is financially resilient

4.0 Relevance

4.1 Gaps addressed by FDMS

Federal farm debt relief programming in Canada has a long history, dating back to 1934 with the introduction of the Farmers' Creditors Arrangement Act. This legislation was enacted in response to falling crop prices and yields that led to alarming farm debt levels.^{note 3} It was followed by the Farm Debt Review Act in the 1980s, which addressed another wave of financial hardship among farmers. Today, Canadian farmers continue to face increasingly complex financial pressures, including rising input costs, unstable commodity prices, extreme climate events, higher interest rates and unpredictable trade disruptions. Many of these challenges are beyond farmers' direct control, yet they have a significant impact on their ability to manage farm debt and maintain the financial viability of their farming operations.

Rising operational costs like farm debt remain one of the most significant business risks facing Canadian farmers.^{note 4} In 2024, farm debt grew by over 14%, making it the largest annual increase since 1981.^{note 5} Stakeholders interviewed during the evaluation emphasized the widespread impact of this growing debt burden, not only on farmers and creditors, but also on provincial and regional economies across Canada. The agricultural sector's cyclical nature, driven by fluctuations in commodity prices, also creates ongoing uncertainty in supply and demand. In this context, programming like FDMS is necessary to address financial insolvency in the sector and support the development of mutually acceptable debt solutions between farmers and creditors, particularly during times of economic instability.

The evaluation found that FDMS addresses a gap in Canada's agricultural sector by providing a national consultation and mediation service specifically to support farm debt. This type of programming is not offered by any other federal, provincial or private program or service. Unlike broader federal insolvency legislation such as the Bankruptcy and Insolvency Act (BIA) or the Companies' Creditors Arrangement Act, FDMS delivers agriculture-specific financial consultation and mediation services that do not involve legal proceedings or public records. While Saskatchewan's Farm Land Security Board (FLSB) includes financial consulting and mediation, its focus is limited to mortgage debt and requires mandatory creditor participation. Other provinces offer various financial consulting services for farmers but lack mediation services. Alternative private-sector financial consultation options are available, such as those offered by financial institutions, law firms, or Licensed Insolvency Trustees. However, these services are often cost-prohibitive for financially distressed farmers, making FDMS a uniquely accessible and sector-specific solution.

4.2 Underestimated and underserved financially vulnerable farmers

Farm insolvency in Canada has been historically underestimated. Previous analyses focused on the annual bankruptcy rate for the agricultural sector which was considered lower than the overall bankruptcy rate in Canada.^{note 6} However, in consultation with representatives from Innovation, Science and Economic Development Canada and analysis of available program data, the current evaluation found that this approach excludes the following key factors in estimating financial insolvency in the sector:

• Insolvent, unincorporated farms that have larger personal debts than farm debts for mortgages on the main residence and farm buildings
• All insolvent farmers participating in FDMS that did not go bankrupt
• Farmers that were insolvent but that did not go through the formal bankruptcy processes laid out in the BIA^{note 7}

Accounting for these factors and excluding all insolvent farms that did not go through either FDMS or the BIA, the farm insolvency rate is estimated to be at least 0.09% of all farms in Canada, or nearly five times higher than previously reported. According to the 2021 Census of Agriculture, the number of farms in Canada is declining.^{note 8} Although this trend likely extended over the evaluation period and led to reduced demand for the program, it is also important to note that farm exits are a natural part of market adjustments in the agriculture sector.^{note 9} Nevertheless, analysis of program administrative data reveals that three distinct types of farmers were over-represented in FDMS relative to their proportion in the total farm population:

• Medium and large farmers in Canada earning more than $250,000 in annual revenue (see Table 2)
• Farmers in Quebec which comprise nearly 40% of all applicants
• Farmers producing horticultural crops or livestock

This evidence underscores that FDMS is likely underserving a large and underestimated number of financially vulnerable smaller farms in specific regions and specific commodity groups across Canada.

4.3 Alignment with AAFC and government priorities, roles and responsibilities

FDMS is aligned with the priorities of the federal government and AAFC's strategic outcomes. The program objectives are consistent with the 2025 Speech from the Throne which stated that the government will protect farmers. This initiative operates within the sector risk core responsibility of AAFC's Departmental Results Framework, which is intended to help farmers manage risk and ensure farm viability. The program plays a key role in this area by providing consistency in the provision of this service across the sector, enabling farmers to manage their farming debt through a non-adversarial mechanism for restructuring financial obligations. Aligning with AAFC's mandate to ensure the agricultural sector remains financially resilient, the program effectively supports farmers in continuing their operations and managing financial insolvency.

5.0 Program design and delivery

5.1 Standing offer contractor design

The evaluation found that the program's use of a standing offer model for contracted financial experts and mediators was a design strength which supported the delivery of FDMS activities in several ways. Firstly, calling up contractors according to regional demand streamlined processes and allowed for flexibility in meeting the needs of farmers. Compared to the previous Farm Debt Review Board model, which employed regional review panels, the current model reduced overall program delivery costs and administrative burden. Secondly, contractors provided a neutral perspective which re-established communication between farmers and their creditor(s) and preserved working relationships through facilitated mediation. Often during times of financial stress the relationship between farmers and their creditor(s) breaks down, making communication and mutual agreement difficult. Contractors overcame this barrier through specialized professional communication and by promoting informed decision making. Finally, unlike other debt resolution mechanisms, FDMS financial experts and mediators provided their services without the need for litigation and court services. Thus, the program reduced undue burden on the legal system while pursuing mutually agreeable recovery plans in a timely manner.

A major strength of FDMS is its use of qualified and skilled professionals in the field of agricultural finance. Contracted program specific financial experts and mediators require agricultural expertise to engage stakeholders and properly support farmers. Familiarity with agricultural terminology and language is necessary to effectively communicate with farmers and their creditor(s) and to develop realistic recovery plans and solutions. Without these skills, perceived lack of expertise may discourage potential applicants or creditors from participating in the program. One creditor with significant experience stated that without FDMS, their ability to work with farmers and other creditors would be limited. Instead, individual creditors would pursue financially distressed farmers unilaterally, rather than achieving a mediated resolution which best meets the needs of a single farmer and all their creditors.

Due to the niche combination of agricultural and financial expertise required for their role, the recruitment of new contractors with respect to future retirements was identified as a challenge to program delivery. There was some evidence of efforts to improve contractor recruitment such as reaching out to a professional association in the field to facilitate the hiring process. Onboarding and training exercises to support skill maintenance or the capacity of program contractors were also undertaken. For example, new contractors shadowed more experienced professionals during their initial cases and actively sought assistance from FDMS administrative staff in how best to provide feedback to farmers regarding their financial plans. However, some training for mediators and financial experts was discontinued prior to the evaluation period, including national meetings for both groups of contractors to share best practices. The program is currently developing new training resources and online modules to better equip contractors with agricultural, financial and mediation skills to provide realistic and effective assistance tailored to the unique challenges faced by farmers.

5.2 Awareness and outreach

The program's ability to support farmers in financial difficulty, or at risk of future difficulty, is dependent on program awareness and outreach. Farmers typically learn about FDMS from their creditors when they are already facing significant financial difficulties. In accordance with section 21 of the FDMA, farmers in immediate financial distress receive a NOI from their secured creditors to begin the debt recovery process and to let them know about their right to mediation. The program also receives a copy of this formal notification from creditors and actively reaches out to farmers with an information package about FDMS and the financial consultation and mediation services it offers.

Administrative data shows that approximately 700 farms received a NOI each year over the evaluation period. Generally, these farmers were good candidates for section 5(1)(a), as they would have benefitted from a stay of proceedings to protect their assets during the consultation and mediation process. However, approximately one‑in‑five farmers who received a NOI applied to FDMS. Many factors influence a farmer's decision not to participate in FDMS after receiving the NOI, such as social stigma or privacy concerns. It is worth noting that farmers are also known to be particularly vulnerable to chronic stress, anxiety, depression and suicide, of which financial stress is a major contributor.^{note 10} Thus, the low conversion rate of NOIs to 5(1)(a) applications is considered a missed opportunity to support farmers.

Potential 5(1)(b) applicants who are at risk of insolvency learn about FDMS through avenues of communication other than NOIs. For example, the program conducted several outreach activities aimed broadly at farmers and creditors during the evaluation period, including a joint social media and online campaign with the Canadian Agricultural Loans Act Program and the Advance Payments Program, as well as digital direct mailouts. In theory, this early engagement was expected to address the program's objective to reach farmers before they were experiencing financial distress. However, AAFC broader outreach campaigns did not meet their targets for engagement and were not identified by key informants as the primary method of program awareness. According to program officials, most referrals for 5(1)(b) applications were a result of large banks who offered interest relief to their clients on the condition that the farmer participated in FDMS.

Evaluation evidence indicates that there was a lack of awareness surrounding FDMS among key stakeholders. For example, interview and document evidence shows that while some large creditors (such as chartered banks) referred clients to the program, smaller independent or private creditors were likely unaware of the benefits of referring farmers to FDMS, particularly for section 5(1)(b). Additionally, national producer associations with established producer networks across Canada were not included in the program's outreach activities despite their potential utility as an avenue for increasing FDMS awareness. Many of these producer networks had pre-existing relationships with AAFC, such as administrators for the Advance Payments Program.^{note 11} Furthermore, there was limited active outreach with other federal and provincial organizations involved in debt resolution and mediation, such as the Office of Superintendent of Bankruptcy and the Farm Land Security Board. The evaluation found these organizations are well-positioned to raise awareness surrounding FDMS and to refer potential applicants in need of support.

5.3 Program funding structure

FDMS is a program legislated under an act of parliament (the FDMA). Unlike AAFC's other statutory programs, FDMS provides a legislated service rather than statutory payments. Therefore, the program has not been funded through statutory appropriation, which represents 60% of the department's expenditures (see Figure 1), and has received support through the annual voted funding process since the FDMA came into force in 1998.^{note 12}

AAFC's other legislated programs have a statutory payment component and receive voted salary and non-pay operating funds to support their delivery. While FDMS receives voted salary funding, in the absence of a statutory grants and contributions component, its unique design relies on voted non-pay operating funds for program delivery (in other words, professional services and travel). The evaluation found that non-pay operating funds were not itemized in the annual budget and more than half of program expenditures were attributed to the use of contractors to deliver program activities across Canada. Yearly program expenses surpassed the budget due to the demand-driven nature of the program and the associated professional services/travel expenses led to cost overruns. The program experienced cost overruns each year from 2015‑2016 to 2024‑2025, expending 44% more than what was budgeted. As such, managing the demand to deliver FDMS required the identification of supplementary funding annually to address this deficit from other sources within the Programs Branch budget.

Source: Agriculture and Agri-Food Canada Consolidated Financial Statements (Unaudited) for the year ended March 31, 2023.

In the context of program design, it is important to consider that FDMS is a demand-driven program. Forecasts show that external financial pressures on farmers are expected to rise due to factors such as increasing input costs or international trade disruptions, which could cause FDMS to experience an uptick in demand and an associated increase in the cost to deliver the Program.^{note 13} In this regard, the financial management approach to budgeting is essential to anticipate increasing costs associated with the growing demand for FDMS services in a sustainable manner.

6.0 Performance measurement

A review of the FDMS PIP found that there were overlapping indicators for different immediate and intermediate outcomes. For example, the percentage of completed applications that resulted in a signed agreement was used to inform both the immediate outcome and the intermediate outcome. To better assess the program's immediate outcome, the current evaluation calculated the percentage of completed applications that resulted in a mediation meeting, quantifying the extent to which creditors' understanding of their client's financial situation improved.

The PIP also listed several independent immediate and intermediate outcomes with only one indicator assigned to each and for some indicators no data was collected. For example, data on whether or not creditors were suspending collection actions while implementing the agreement was missing. Further, due to the program's small size, changes in the overall financial health of the agricultural sector (ultimate outcome) cannot be solely attributed to FDMS. Finally, application forms reviewed did not collect data in support of Gender-based Analysis Plus. Data collection for these indicators is planned to be included in an update to the program's application form.

7.0 Efficiency

Despite increases in file complexity, the FDMS streamlined management practices and decreased salary costs when compared to the previous 5-year evaluation period. Bottlenecks in the client journey caused by multiple disconnected data systems and lack of automation presented challenges to process efficiency.

7.1 Program costs

During the reference period, total program expenditures exceeded program budget by approximately $2 million, with overall program expenditures increasing by 35% over the evaluation period. However, when compared to the previous 5-year period (2014-2015 to 2018-2019), the cost per mediated case declined due to efficiencies in case management (see Table 3). Although the cost for financial experts and mediators per FDMS case increased, these costs were partially offset by a decrease in AAFC staff salaries when compared to the previous 5-year period (2014-2015 to 2018-2019). The growth in financial expert and mediator expenses was due to increased case complexity driven by more creditors, greater outstanding debt and larger farm sizes. Gains in program efficiency were due mainly to centralization of FDMS's management team over the evaluation period which partnered with program support officers to assist with case management and follow-up tasks. Comprehensive documentation for program staff also increased operational efficiency by clearly outlining case management steps.

7.2 FDMS client journey

The client journey for farmers who proceed to mediation is similar across the 2 FDMS program sections. Figure 2 shows that farmers who submit all required information with their initial application are admitted to FDMS within one day, regardless of whether they apply under section 5(1)(a) or 5(1)(b). Once a farmer is accepted into the program, FDMS staff assigns both a mediator and financial expert to the case. For applicants under 5(1)(a), creditors are immediately notified of the farmer's participation, which triggers a stay of proceedings and halts all collection activities. This timely communication with creditors, required under the FDMA, helps protect the farmer's assets. Prompt assignment of financial experts and mediators also ensures that farmers receive support when they need it most.

Source: Office of Audit and Evaluation calculations based on FDMS program administrative data.

Note: Number of days is the median number of days for an FDMS event to occur. For a more detailed view of the client journey see Annex C. Percentages are based on the number of cases received between 2019-2020 and 2023-2024.

Within 45 days of the application, a financial expert visits the farm to assess assets and gather financial information. During this time, documentation is also collected from all creditors about the farmer's outstanding debts. To develop a detailed financial statement and a realistic recovery plan, it is essential that both farmers and creditors provide complete and accurate financial documents. The timeframe for this stage of the process is the same for both 5(1)(a) and 5(1)(b) clients. However, evaluation findings identified several delays in the client journey which occurred due to:

• limited business management skills and/or reluctance by the farmer to engage with the financial expert
• many small- and medium-sized farms lack formal financial management systems, limiting their awareness of financial risks until problems escalate
• occasional scheduling conflicts between the farmer and financial expert
• multiple creditors on a single file, as each creditor must provide information about outstanding financial obligations
• delays caused by creditors not providing requested information in a timely manner

Mediation meetings for applicants under both sections were typically held within 60 days. However, administrative data shows that the program did not consistently meet two service standards related to sending all necessary documentation to both creditors and farmers seven days prior to the mediation meeting and holding the mediation meeting within 70 days.^{note 14} Delays in mediation meetings were primarily due to scheduling conflicts or situations where creditors or farmers viewed the proposed recovery plans as infeasible.

Analysis of program data revealed that 94% of 5(1)(a) cases that proceeded to mediation required at least one extension to the stay of proceedings and nearly 25% required three extensions. Notably, the percentage of 5(1)(a) cases requiring three extensions to reach mediation increased by 6% compared to the previous 5-year evaluation period. This high rate of extensions for 5(1)(a) cases confirms the increasingly complex financial consultation and mediation process of the FDMS client journey.

Disconnected data systems and lack of automation

The program's efficiency was hindered by multiple disconnected data systems and lack of automation, increasing administrative burden and creating case processing delays. While FDMS case tracking was conducted using AAFC's corporate records repository, individual case management was conducted in a legacy custom software system. This required program staff to enter data into both systems by hand, increasing the risk of inaccuracies in records management, as well as limiting reporting for decision making. For example, not all information about a single FDMS case was held in one system requiring data to be migrated from both systems to provide information on program use and performance. Processing stays of proceeding letters was also done on a separate internal system due to limited automation capabilities within the case management system.

On average, program staff had the capacity to process four or five applications per day for cases with less complexity and all the necessary documents. However, for cases with multiple creditors and many documents, sending letters and mediation packages to clients was time intensive. For example, cases with 50 or more creditors required up to two business days to process. This evidence highlights that the program's multiple disconnected data systems and lack of automation impeded its ability to process some cases efficiently. The evaluation found that in times of high demand, this will likely present greater challenges in meeting program service standards in protecting farmers' assets, as per the requirements of the FDMA.

7.3 Cost comparison with other federal, provincial and private services

Evidence gathered from documents, interviews and data analysis shows that FDMS is the most cost-effective financial consultation and debt mediation service available to farmers and creditors in Canada. While the BIA does not offer a financial consultation service, both the FLSB and FDMS provide this type of support at no cost to farmers. Private financial consultation is available to Canadian farmers at an estimated cost of $9,375 for a small farming operation and $18,750 for a medium or large operation. In contrast, FDMS financial experts provide farmers with a detailed review of their current financial situation and a recovery plan to present creditors during mediation at no cost.

Like FDMS, participation in the FLSB mediation process comes at no cost to farmers, and if a farmer is unable to cover the costs of participating in the BIA's mediation process, this expense is borne by creditors. Unlike FDMS, both the FLSB and BIA charge creditors to participate in the mediation process ($500 and up to $1,800, respectively). Under the BIA, creditors may also incur a fee of up to 5% of the funds recovered. Private or in-house mediation costs are estimated at $800 per day but can vary depending on the length of the process, while FDMS mediation is typically conducted in one day. Creditors and farmers may also incur legal fees when mediation is carried out or assisted by lawyers for private or in-house mediation.

8.0 Effectiveness

8.1 Immediate outcomes

Between 2019 to 2024, FDMS received 1,175 applications, of which over 95% were approved. Figure 3 shows that farmers applying for section 5(1)(a) accounted for 57% of all FDMS applications. This outcome achieved the program's target, temporarily protecting over 600 farmers' assets by pausing collections and facilitating a neutral environment for mediation. With the support of FDMS financial experts and mediators, clients from both sections were actively involved in the development of financial statements and recovery plans. This important program activity helped farmers to better understand their farming operation as well as the financial options available to support their businesses. Creditors also benefitted from FDMS participation by receiving an independent review of their client's financial situation though the objective assessments provided by FDMS financial experts and by participating in a facilitated, neutral mediation process. The evaluation found no explicit barriers to participation for underrepresented groups.^{note 15}

Source: FDMS program administrative data.

During mediation, creditors also had the opportunity to learn about the farmer's commitments to other creditors and to communicate with them about their financial situation, which is a unique feature of FDMS. Program data shows that 5(1)(b) applicants were more likely than 5(1)(a) applicants to proceed to mediation with their creditors (80% vs. 76%, respectively). Mediation outcomes were also more favourable for 5(1)(b) applicants than those under section 5(1)(a). These findings align with evidence from the document review and key informants suggesting that earlier intervention allows farmers to enter section 5(1)(b) of FDMS with better recovery options which, in turn, facilitates the process leading up to, and following, the mediation meeting.

8.2 Intermediate outcome

The program partially achieved its target to reduce farmer debt and/or increase revenue with 80% of participants at least partially implementing the terms of their signed agreements. Challenges with full implementation of mediated agreements related to farmers' financial constraints or lack of enforcement mechanisms for creditors to pursue farmers following mediation. Most participants were satisfied with the advice received from financial experts with no differences reported by farmers across sectors or years of experience. Creditors also found the mediation process favorable for debt recovery, with nearly 70% reporting that FDMS produced a reasonable plan of action for farmers to repay their debt.

The program's outcome for increased agreement between insolvent farmers and their creditors on financial recovery measures was measured by the percentage of completed applications that resulted in a signed agreement. Overall results show that the target threshold of 60% was met each year during the evaluation period. However, when broken down by section, the target for 5(1)(a) applications was met only twice. The evaluation found that case complexity and differing expectations between farmers and creditors were key factors in reaching a signed agreement, particularly for section 5(1)(a) cases.

Of the cases that went to mediation, 78% resulted in a signed agreement. Analysis revealed that 5(1)(b) cases were more likely than those under section 5(1)(a) to negotiate signed agreements with their creditors following mediation (82% vs. 73%, respectively). According to program data (see Figure 4), signed agreements most often included plans to restructure debt (62%), sell off assets (43%) and/or change management (12%). Notably, struggling farmers may also exit the sector without going through a formal insolvency process after FDMS participation. The percentage of agreements involving a satisfactory exit arrangement (in other words, leaving farming altogether) decreased by 6% over the last evaluation period, indicating that FDMS helped more farmers remain viable in the agricultural sector.

Source: FDMS program administrative data.

Note: Mediation agreements include multiple actions; therefore, categories sum to over 100%.

The program partially achieved its outcome to help farmers advance their personal and business goals. Evidence shows that most, but not all, farmers gained a greater understanding of their financial situation and improved farm viability through participating in FDMS. Although some farmers exited farming altogether following FDMS participation, the program enabled these farmers to exit the sector without declaring bankruptcy, providing them with a less financially damaging outcome. Finally, the last parliamentary review pointed to the benefits of short-term follow-up with farmers and creditors post-mediation to support the implementation of recovery plans. Apart from a 1-year post-mediation mail-in survey in use during the evaluation period, there was minimal follow-up with farmers or creditors after reaching an agreement to support implementation. Low response rates to the survey further limited the program's ability to assess these outcomes effectively. The program is currently migrating the paper-based survey to an online format to improve the response rate and better assess its intermediate outcomes.

8.3 Ultimate outcome

The financial health of farms was measured in terms of sufficient cash flow to cover expenses and debt obligations, as well as debt to equity ratio levels. Even though the program met its goal of having 90% of farms financially healthy, the evaluation found that FDMS had a limited impact on the sector's overall financial health due to its relatively small scale and the presence of other influencing factors. The number of Canadian farms that were financially healthy declined between 2015 and 2019 (see Figure 5), while the recovery in 2021 was largely influenced by low interest rates, rising commodity prices and support from AAFC's other business risk management programs.

Source: Statistics Canada, Farm Financial Survey (2015, 2017, 2019, 2021 and 2023); Table 10-10-0145-01 and Table 32-10-0136-01.

Trends in FDMS participation during the evaluation period followed years of declining revenues combined with increasing expenses and interest rates across the agricultural sector. For example, the agriculture sector saw significant growth between 2019 and 2023 with dramatic increases in farm revenues and assets. At the same time, prime interest rates grew by 76% and interest expenses grew by 55%. In 2024, farm income began to decline, falling by over 6% due to lower grain prices and support payments with a significant impact on a farm liquidity.^{note 16} Farm income is forecasted to decline by another 15% in 2025 creating additional strain on the agriculture sector's ability to cover farm debt. As well, extreme weather events have a significant impact on farm profitability for those not participating in business risk management programs.

Overall, the farming sector had sufficient cash flow to meet its financial obligations. However, the evaluation found that a farm's cash flow is largely dependent on their ability to sell inventory for a fair price. Commodity markets are cyclical, with prices during harvest typically 15% to 30% lower than the month prior to harvest. Commodity prices are also impacted by volatility in global commodity markets, such as those from tariffs or market closures. At greatest risk are farm operations with thin margins, such as those producing hogs, fruits and vegetables, or smaller operations that have financial obligations that come due during harvest. This can result in commodities sold at or below cost, eroding their operation's financial health.^{note 17} In sum, falling farm net income, rising interest expenses and volatility in commodity markets threaten farm financial health indicating a likely increase in future demand for FDMS.

9.0 Conclusions and recommendations

Canadian farmers face numerous challenges that threaten the financial stability of their operations and ability to honour farm debt, such as volatile commodity and input prices as well as international trade uncertainty. The FDMS addresses a market gap in farm debt support by offering a unique federal service that complements AAFC's broader suite of business risk management programs. Aligned with departmental priorities and strategic objectives, the program enabled farmers to consult with agricultural financial experts and negotiate mutually acceptable debt agreements with their creditors through a neutral mediation process.

The following three conclusions led to recommendations to improve FDMS. First, the program is underutilized by the sector, as evidenced by historic underestimation of farm insolvency in Canada and low participation rates amongst smaller farming operations and those in specific regions and commodities. Consistent with previous evaluations and reviews of FDMS, access to FDMS through section 5(1)(b), prior to receiving a notice of intent from creditors, could significantly improve outcomes for farmers facing financial difficulties. However, current program outreach activities do not leverage established farmer and creditor networks that are well positioned to reach farmers in need.

Second, despite increases in file complexity, FDMS management was streamlined and salary costs decreased when compared to the previous 5-year evaluation period. However, delays in the client journey and bottlenecks related to multiple disconnected data systems with limited automation hindered process efficiency and introduced risks of data inconsistencies and administrative errors. Third, ensuring a more stable budgetary process would also strengthen the program's long-term sustainability and operational resilience.

Recommendations

• Recommendation 1: The Assistant Deputy Minister of Programs Branch, in consultation with Public Affairs Branch, should develop a FDMS promotional strategy which includes national producer associations and key financial organizations to improve program awareness amongst Canadian farmers.
• Recommendation 2: The Assistant Deputy Minister of Programs Branch, in consultation with Information Systems Branch, should seek opportunities for low cost but meaningful improvements to FDMS data systems.
• Recommendation 3: The Assistant Deputy Minister of Programs Branch and Assistant Deputy Minister of Corporate Management Branch should review and implement an approach that addresses the financial sustainability of the FDMS.

Annex A – Evaluation methodology

Document, literature and file review

The evaluation reviewed all internal AAFC documents as well as reports from other organizations related to the FDMS operational context and background during the evaluation period (2021-22 to 2024-25). Relevant documents included, but were not limited to:

• documents outlining Government of Canada priorities
• policy, planning and governance documents specific to FDMS activities
• previous evaluations, studies and/or parliamentary reviews of FDMS activities
• departmental results, reports and plans as appropriate

The literature review was conducted with support from the Canadian Agriculture Library to identify academic literature relevant to the evaluation. Artificial intelligence tools were used for the exploration and comparison of alternative farm debt mediation and consultation services from the private sector as well as federal, provincial and territorial governments across Canada. In accordance with TBS guidelines, findings generated by artificial intelligence tools were reviewed by qualified evaluation staff to confirm the validity of source documents before use.^{note 18}

Key informant interviews

The evaluation conducted interviews with 15 AAFC and external FDMS stakeholders to assess design, delivery, efficiency and effectiveness. Interviewees included:

• AAFC staff (7)
• FDMS financial experts and mediators (4)
• Creditors (1)
• Farmer (1)
• External services (2)

Primary and secondary data analysis

A review of program and administrative data was conducted to summarize program outcomes. The review examined the PIP indicators, as well as other data in the program's database concerning delivery and impact.

Secondary data analysis was used to supplement program data and to provide context and insight into the program's role in the agricultural debt mediation landscape. The evaluation leveraged available information from Innovation, Science and Economic Development Canada's insolvency statistics, as well as Statistics Canada's Agricultural Taxation Data Program, Census of Agriculture, Farm Financial Survey and other statistical products.

Efficiency analysis

A detailed examination of efficiency was conducted within the context of program delivery as part of the primary and secondary data review and key informant interviews. This analysis examined the relationship between inputs (time, money, and personnel) and outputs (number of mediated cases and successful resolutions). Key metrics included processing time, cost per mediation and overall satisfaction of participants. The analysis also identified areas where the program is performing well in terms of maximum value and optimal resource utilization versus where improvements are needed in comparison to benchmarks and standards.

Methodological limitations

Annex B – Farm Debt Mediation Service performance information profile

Immediate outcome

Intermediate outcome

Ultimate outcome

Annex C – Farm Debt Mediation Service Client Journey

Annex D – Management response and action plan