The turbulent market events that produced 2007’s soaring grain prices, dollar value and input costs also produced a deeply uneven Canadian agricultural economy.
A new Statistics Canada report says overall farm income increased last year in the three prairie provinces and Quebec, buoyed by crop prices in the West and higher supply management incomes in Quebec.
In the remaining six provinces including British Columbia, Ontario and Atlantic Canada, “realized net income dropped to very low levels.”
The divide also was evident in the different results between sectors.
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While crop receipts were up 24.8 percent to more than $18 billion, the largest increase in 13 years, and supply managed farmers saw receipts rise 8.5 percent, the largest increase in 20 years, cattle and hog producers were watching their receipts decline and their herds shrink.
Maritime potato farmers also watched prices fall, often below production costs.
Overall, the combination of market receipts and program payments pushed total farm cash receipts to more than $40 billion for the first time, according to the Statistics Canada report published in October.
But the report also provides evidence that much of the increased market income produced by higher prices went to pay sharply higher input costs.
Farm operating expenses increased 8.2 percent, led by a 22 percent increase in fertilizer costs, a more than 20 percent increase in feed costs, higher fuel bills and a 10.6 percent rise in the cost of servicing the ever-growing farm debt.
It was the largest increase in operating costs since the double-digit inflation days of the early 1980s.
So while market receipts increased to a record $36.4 billion, operating expenses rose to $34.2 billion, leaving a cash positive of $2.2 billion.
Only supply-managed farmers, particularly in the dairy sector, had some protection from rising costs. A support price increase for dairy announced by the Canadian Dairy Commission to reflect rising production costs meant that milk prices increased 4.4 percent during the year.
Program payments added $4.1 billion to farm receipts, a decline from recent years.
Once depreciation was factored in, the Statistics Canada analysis said realized net farm income last year was $1.7 billion, more than double the previous year but still a fraction of the value of farm production.
The study said that the agriculture and food industry continues to be a strong factor in the Canadian economy. Agriculture employed 337,300 people last year, almost two percent of the Canadian workforce. It includes farmers and all hired labour 15 years or older.
Food processors and beverage manufacturers employed more than 256,000 people, accounting for more than 14 percent of the manufacturing workforce.
Labour productivity in agriculture, which measured the value of goods produced compared to the number of workers, continued last year to rise faster than in the general Canadian economy. In the past five years, agricultural productivity has increased more than any other major industrial sector.
“This productivity growth can be related to increasing efficiency in agriculture with farmers adopting new labour-saving and output-enhancing technologies,” said the report.
Agriculture and food also continued to be a strong contributor to Canada’s overall trade surplus. Last year, the country had an $8.9 billion food and agriculture trade surplus, up $1 billion from 2006 as the value of exports climbed to $34.5 billion.
