Ottawa is promising to spend $10 billion less in its next budget and at least on paper, Agriculture Canada is chipping in more than $400 million to the cause.
Spending estimates for the 2011-12 fiscal year beginning April 1 were tabled in Parliament March 1 by Treasury Board president Stockwell Day.
The Agriculture Canada budget is projected to fall 14 percent to $2.57 billion from almost $3 billion budgeted for this year.
Overall federal spending is forecast to fall to $250.8 billion from $261.2 billion. Much of that reflects the end of the government’s multi-billion stimulus spending package created to combat the 2009-10 recession.
However, if the Agriculture Canada portion of the pared down spending plans is any indication, it is not a simple matter of program cuts.
It is a complicated mix of programs meant to expire, money shuffling and unreported future liabilities.
A major part of agriculture’s contribution was $210 million in savings from programs that are being phased out, including the termination of funding for hog disease control, orchards and vineyards transition program and the plum pox eradication program.
The new spending plans also make no allocation for unexpected AgriRecovery payments that this year cost Ottawa $54.2 million, largely for prairie water saturation. AgriRecovery may well cost money this year if there are disasters.
The government projects a 42 percent, $78 million cut in its agricultural marketing act payments.
And it is budgeting for an 11 percent drop in contributions to the AgriInvest program from $156 million to less than $140 million.
The government projects more than $40 million in savings as the fund to help build biofuel industry infrastructure winds down. Capital spending plans will be trimmed by tens of millions of dollars.
The estimates presented to Parliament also show a $73.6 million, or 11.4 percent increase in funding for the Canadian Food Inspection Agency but the increase is a bookkeeping illusion.
Fees collected by CFIA now will go into general government revenues and then get paid back, recorded as increased spending.
Meanwhile, Agriculture Canada economists have published farm income estimates that project a sharp decline in realized net farm income in 2011, particularly in Manitoba, Saskatchewan and British Columbia.
The department says higher input costs, rising debt servicing costs, reduced program payments and reduced seeding on the Prairies because of last year’s flooding will be the main reasons.
In the report, realized net income, defined as receipts minus costs and depreciation, is projected to fall 38 percent nationally, 69 percent on Manitoba and 66 percent in Saskatchewan.
Cameron Short, executive director for policy analysis at Agriculture Canada, said 2011 would produce “a small year-over-year decline” after record income results in 2010.
He was comparing net cash income numbers that do not include depreciation, rather than the realized net income calculation most agricultural economists say is a more accurate reflection of farm financial health.
In 2010, the department says net cash income, defined as gross receipts minus production costs, hit a record $8.9 billion because of a surge in commodity prices late in the year and the fact that many input costs declined last year.
