Financial uncertainty hits B.C. dairy farmers as major operation forced into creditor protection

Ted Dykman grew up on the Abbotsford dairy farm an accounting firm now oversees.

Over the past 60 years, his family-owned cattle company has navigated industrial change, weather woes and the raising of large-scale livestock — only to see a dispute with a bank bring the business to its knees. 

A B.C. Supreme Court judge placed Dykman's farm into creditor protection late last month following an application from the Bank of Nova Scotia citing a default and mounting interest payments on $75 million worth of debt.

The order appointing PwC Canada as monitor for an enterprise responsible for more than one per cent of British Columbia's milk supply has sent shockwaves through an industry struggling to cope with mounting financial pressures from climate change, interest rates and soaring land values.

"I think it's definitely concerning," says Sarah Sache, a Fraser Valley-based farmer who sits on the boards of both the B.C. Dairy Association and the National Dairy Council of Canada.

"We've seen them trying to make it work, and we've seen it not work out. And so I think for those of us who are trying to grapple with succession specifically, grapple with having a future in the industry, if they can't make it, then we do have to wonder what that means for us."

The order placing Dykman's farm under the control of a court-appointed monitor follows a bitter dispute.

The farmer wouldn't comment on the case, and Scotiabank did not return an email from CBC, but their affidavits lay out a charged and, at times, emotional conflict over the fate of one of the province's larger dairy farms.

In court filings, Dykman describes a relationship that began in 2019 when he says he was approached about moving financing on what was then a $44 million debt from Farm Credit Canada to the Bank of Nova Scotia.

He claims penalties associated with the transfer meant he never realized the benefits of the deal, and while the bank provided money to expand his business, subsequent defaults following interest rate hikes left him making crippling $463,000 monthly interest payments to the bank.

He says he's not alone.

"The dairy community in British Columbia is relatively small, and I have friendly relationships with a large number of farmers across the province. As I understand it, in 2019, right around the time of the loan, The Bank [of Nova Scotia] became very active and aggressive in lending to the dairy industry," Dykman's affidavit says.

"I am personally aware of at least six other dairy farmers who are in a similar position as me with the bank in that they fell into default as a result of increased interest rates or other circumstances outside their control and are now either in a forbearance agreement with the bank or being pushed to sell lands, quota or entire operations."

According to Dykman's affidavit, his parents bought the land that grew to become today's 483-acre farm in 1965. The operation has grown from 80 cows to more than 1,800 — producing about 27,000 litres of milk a day.