Last week, as several dozen farm leaders and bureaucrats gathered in Ottawa to talk about reforming the farm income safety net system, they did not have to look far to find evidence of the urgency of the task.
Three key economic indicators published two weeks ago by the federal government point to growing financial problems in many parts of Canada’s farm sector.
The number of people working on Canadian farms fell by close to 10 percent during the past year, down to 413,000, according to Statistics Canada.
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The number of farm bankruptcies in Saskatchewan and Alberta rose to more than 100 during the first nine months of the year. Economists say that is just a fraction of those who chose to leave farming.
And according to preliminary tax data for 1996, farm profits before depreciation plunged last year in most sectors.
“I believe we have a serious and growing problem of shrinking margins and yet governments seem almost indifferent,” said Canadian Federation of Agriculture president and safety net committee member Jack Wilkinson. “It is like they have decided farm income is not a problem.”
The committee met Dec. 11 to begin preparing a report for agriculture ministers, to be delivered next July.
Wilkinson said he fears too much emphasis is being put on the boom in the hog sector.
“That bubble could burst because there are reports of overbuilding around the world,” he said. “That is not a reliable offset to troubles elsewhere in the industry.”
At the University of Manitoba, agricultural economist Daryl Kraft said bankruptcy numbers reflect the past more than present conditions and the numbers on lost employment in agriculture seem too extreme to trust as a trend.
But he said the falling net operating profit numbers point to a problem.
“I think it is a case of rising costs eating up growing revenues and if the business is just treading water in a relatively good year like last year, you can imagine what will happen in a year that is one of the worst in the past five or six,” he said in a Dec. 8 interview. “No doubt, the long-term viability of some operations has to be questioned.”
According to Statistics Canada, livestock combination farms were the most profitable last year. They showed an average 30 percent increase in net operating income to more than $74,000.
Hog farmers, on average, saw net operating income soar 43.7 percent to $40,000, according to tax return claims.
The average grain and oilseed farmer claimed pre-depreciation net operating income of just under $26,000, a slight increase.
But for most other types of farms, from dairy to cattle to fruit and vegetable operations, profits plunged. In the poultry and egg sectors, average net operating income fell almost 19 percent to $41,000.
Leaving the farm
But the most dramatic numbers during the week came in the federal agency’s employment statistics.
In November, farmers reported creating close to 10,000 jobs, whether through adding family members to the “self-employed” category or hiring employees.
But during the past year, the household survey used to calculate employment numbers reported that 21,000 self-employed farmers and family members left the farm.
An equal number of farm employees left the industry. Quebec, Ontario, Alberta and Saskatchewan recorded the highest loss of workers.
Deborah Sunter of Statistics Canada said in an interview the agency does not look behind the numbers to inquire why the trend exists.
“But the returns from our survey show that in agriculture, there is a sharp downward trend,” she said.
It is a much more optimistic picture on the food processing and manufacturing side of the business.
During the past year to the end of November, employment in the food manufacturing sector from slaughter plants to bakeries increased by more than eight percent (18,000 workers) to 233,500.
