OTTAWA – There is a reality gap between financial pressures being felt by many farmers and the rosy vision of a financially stable farm sector offered at year’s end by Agriculture Canada, says a leading farm spokesperson.
“I find it really frustrating and disappointing when people try to paint a picture that isn’t there,” Canadian Federation of Agriculture president Jack Wilkinson said Dec. 23. “Frankly, I would not interpret the numbers the way they have. They are more optimistic than what I see.”
On Dec. 20, an Agriculture Canada economist offered the nation a vision of an increasingly prosperous, wealthy and healthy farm sector.
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Between 1993 and 1995 farm incomes were up, asset values increased, debt-to-asset ratio down and investment up, Dave Culver of the department’s economic analysis section told a news conference.
“Overall, the financial situation on Canadian farms improved between 1993 and 1995,” said Culver.
For Wilkinson, it was all too positive.
“There is almost a tone there that safety nets aren’t needed so we can cut them, but people who are losing their shirts wouldn’t see it that way,” he said.
Too optimistic
In fact, a senior Agriculture Canada official supports the view that the report on the 1995 results was more optimistic than today’s reality.
Jack Gellner, director of industry and policy analysis, said the farm outlook has darkened somewhat this year, with a further slide expected in net farm income next year.
Falling commodity prices, rising production costs, government cost recovery and falling support payments are eating into the optimism.
“We are in the process of revising the farm income forecasts,” said Gellner. “I think they’ll show 1996 down some and we expect the trend to be the same in 1997.”
The department’s farm financial survey was even a bit too optimistic in suggesting that farm net operating income increased in 1995.
In fact, revised Statistics Canada data published in December showed net farm income fell one percent last year, despite higher commodity prices in many sectors. Farming costs rose faster.
Bleak picture
And in September, Agriculture Canada itself published farm income data which presented a much more bleak picture of the long-term trend in farm incomes.
“Over the last 20 years, net cash income has increased in nominal terms (current dollars) but not in real terms (constant dollars),” said the Farm Income, Financial Conditions and Government Assistance Data Book. “In 1995, real net cash income after adjusting for inflation represented only 48 percent of the adjusted 1975 level. Real receipts in 1995 were just above the 1975 level but expenses were 43 percent higher.”
However, Culver told the Dec. 20 news conference the 1993-95 comparison shows real improvement in the farm financial base.
Net worth and asset value increased during the two years. In 1995, average net farm worth rose to $538,319.
And the larger they got, the more farm operations were able to pay their own way.
A typical commercial farm with revenues between $100,000 and $150,000 could expect to earn $38,568 from the farm – 70 percent of total family income.
When revenues exceeded $250,000, the portion of income earned from sale of farm products rose to 84 percent.
Farmers also were investing more in their farms.
