Canadian farm incomes are set to tumble back to earth in 2011 after a year that Agriculture Canada says saw a record level of net farm cash returns.
In a farm income forecast published Feb. 28, the department projected that realized net income will fall 38 percent nationally this year, 69 percent in Manitoba and 66 percent in Saskatchewan.
In British Columbia, this will be the third consecutive year of negative realized net income.
Alberta is expected to fare the best among western provinces with a sharp increase in realized net farm income, but only because last year’s results were a dismal $64 million.
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The department makes three assumptions when projecting lower farm:
• debt-servicing charges will increase as interest rates rise;
• input cost increases will outstrip income increases;
• spring seeding conditions on the Prairies may reduce the acreage planted.
Cameron Short, executive director for policy analysis at Agriculture Canada, told reporters that this year’s results look weaker only when compared to last year’s strong financial results.
“Expected increases in input prices, uncertainty on growing conditions in the Prairies and rising interest rates temper an otherwise positive forecast for 2011,” he said.
“Income is still higher than the previous five-year average.”
He was comparing net cash income, which does not include depreciation.
Realized net income this year, including depreciation, is projected to fall more than 10 percent below 2005-09 averages.
The departmental report also projects that program payments this year will fall 20 percent to $2.4 billion, although that does not make assumptions about AgriRecovery payments because they are triggered by unexpected natural disasters. The 2005-09 average program payment was $4.2 billion.
Short said last year’s financial returns were strong because of the late-year boom in commodity prices, lower fertilizer, pesticide, feed and seed prices and record low interest rates.
