When Agriculture Canada published its latest 2003 farm income forecasts last month, farmers had one consolation. While the forecast predicted a 19 percent decline in national realized net farm income, including more than a 50 percent drop in Saskatchewan and 61 percent in Alberta, there was always the possibility that unexpected government payments, or a spike in market prices, could fill in some of the gap.
Maybe, but if the past decade is a guide, it’s more likely that Agriculture Canada economists over estimated income.
In nine of the 11 years between 1991 and 2001, government’s early-year farm income projection was optimistic. Incomes were far less than projected, in several years by more than $1 billion.
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In 1993, for example, the department predicted income of $4.8 billion, but farmers watching their incomes falling held rallies around the country calling for government aid in an election year. No programs were announced and Statistics Canada later calculated actual income at $2.56 billion.
Agriculture Canada economist Lambert Gauthier said there are many reasons early-year income projections are so imprecise.
Unpredictable market and currency fluctuations can dramatically change income, unpredictable weather can sharply reduce production, government political decisions during the year can influence program payment levels, the crash of hog prices in 1998-99 could not be foreseen and farmers often choose not to withdraw all the Net Income Stabilization Account funds that have been triggered.
Still, the department defends the projections as a planning tool, even if farmers shouldn’t put too much faith in the actual numbers.
