Much of Western Canada’s agriculture sector continues to spiral downward into an economic black hole, according to Statistics Canada cash receipt numbers published for the first three quarters of 2003.
Bovine spongiform encephalopathy in the cattle industry, low grain inventories, low prices and a developing income problem in the hog industry mean the farm economy is facing a crisis.
One farm leader said it is about to get much worse, since Statistics Canada numbers do not yet reflect the full depth of falling hog prices.
“Most definitely, fourth-quarter numbers will be worse,” said Canadian Federation of Agriculture president Bob Friesen Nov. 28.
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“There will be no quick turnaround in cattle or grain and right now the hog industry is really in the tank. This is a crisis. This is going to be a very difficult winter for many farmers and a very busy winter for (debt) mediation people.”
Friesen said the new federal government of Paul Martin will face a significant challenge in figuring out how to respond.
He said finance minister John Manley recently turned down a CFA request that cattle producers affected by BSE be allowed to defer income tax on revenue from sales last year.
At Statistics Canada, analyst Kim Boychuk said it is too early to project what fourth-quarter in-come or revenue numbers will look like.
“There are just too many unknowns to be able to project.”
However, the first nine months of the year are in the books and it is grim reading.
Cattle sector receipts were $2 billion, 37 percent below last year. Grains and oilseeds sales fell $300 million during the nine months. Hog receipts increased slightly but since the third quarter ended, prices have plunged.
The hardest hit provinces have been Alberta and Saskatchewan, with farm receipts down 17 percent and 6.5 percent respectively. The hog decline will hit Manitoba hard in the fourth quarter.
The bleak 2003 statistics come on the heels of a difficult 2002 when drought left the grain sector with little inventory to sell.
“Total net income, which adjusts net cash income for changes in farmer-owned inventories of crops and livestock, depreciation and income-in-kind, plunged to a revised $1.3 billion in 2002, the lowest level in more than 30 years,” the federal agency reported.
Only stability in supply managed sectors and record payments from government programs are keeping overall numbers steady, with a Canada-wide farm cash receipt total down just 4.5 percent to $24.5 billion, $1.1 billion lower than last year.
Statistics Canada reported that program payments during the first nine months of the year put more than $3 billion into the farm economy, surpassing the previous record set in 1988 by $400 million.
Crop insurance paid out a record $1.3 billion, mainly in drought-affected Western Canada. Farmers withdrew a record $539 million from their Net Income Stabilization Accounts during the first three quarters of the year.
Federal and provincial income disaster assistance programs added another $284 million to the pot and in Quebec, the provincial stabilization program paid out more than $500 million, in part to cover cattle losses from the BSE problem.
