Federal farm income totals for 2002 show a depressingly familiar pattern for Saskatchewan.
The province’s farmers last year saw realized net income cut almost in half to $483 million, far less than total program payments.
And when the loss of inventory value because of the drought-reduced crop is factored in, total net income last year in Saskatchewan was a negative $242 million.
“To a large extent, we’re victims of a fairly non-diversified primary production sector that is vulnerable to weather catastrophes and a long-term decline in prices,” University of Saskatchewan agricultural economist Rose Olfert said.
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Federal assistant deputy agriculture minister Doug Hedley said Saskatchewan’s long run of bleak financial years reflects the fact that the province has not diversified its agricultural economy as much as neighbouring provinces.
“It’s still very dependent on the grains sector and that is a very vulnerable sector,” Hedley said May 29. “I think that is changing but it explains for now why the province has had a string of bad years.”
Alberta, with a diminished grain crop and forced livestock sell-off because of a lack of feed, last year recorded an increase in realized net income but had zero total net income when the decline in inventory values is subtracted.
“Total net income levels can fluctuate substantially with large swings in grain production,” said the Statistics Canada analysis of the farm income numbers. “Last year’s production season, one of the worst in the past 25 years, forced Canadian farmers to empty their bins to their lowest levels since 1984.”
Saskatchewan and Alberta were hardest hit as inventory values fell a record $1.4 billion and Alberta’s cattle herd fell more than 10 percent.
The prairie results, as well as hog price declines, affected national calculations, helping to reduce realized net income in Canada to $3.7 billion from $4.7 billion in 2001.
Early indications for 2003 are not much better.
Statistics Canada reported that during the first quarter of 2003, farm cash receipts increased but it was mainly because of higher program payments. The aftermath of drought continued to drive down prairie sales.
The first quarter results published last week do not anticipate the impact that discovery of a case of bovine spongiform encephalopathy is having on second quarter results for the beef industry.
But even before the BSE earthquake, farm receipts in the January to March period were up only because of record program payments.
“First quarter program payments this year broke a 10-year-old record high,” said Statistics Canada. “Producers received $1.4 billion in the first quarter, up substantially from $736 million in the first quarter of 2002.”
Most of the increase came from $1.1 billion in crop insurance payments.
Olfert said the Saskatchewan statistics also reflect the fact that Statistics Canada counts tens of thousands of farms with gross income so low that they cannot hope to report a profit. They are not really commercial farmers.
“If the report was just about larger commercial farms, the report would be much more positive,” she said. “The large farms are doing better. The smaller farms don’t depend on farm income for a living and the ones suffering are in the middle, hoping to make it as farmers but not generating enough income.”
Hedley said Saskatchewan’s move away from grain dependence has been slower than in sister provinces.
“It is happening but as long as it is largely dependent on a few commodities that now face competition around the world, there will be income problems,” he said.
