Optimistic predictions from politicians and economists aside, Canada’s farmers have been watching their financial bottom line deteriorate through the mid-1990s, according to a federal analysis of farm incomes.
Farmers have been earning less as government support falls, production costs rise and market returns fall short of filling the void.
Meanwhile, they are falling deeper in debt as they borrow to invest in their operations.
“It’s like being caught in a vice,” said Rod Scarlett, executive director of Alberta’s general farm lobby group Wild Rose Agricultural Producers. “And they are being forced into circumstances where it costs more to do business, whether it is user fees, railway abandonment or elevator consolidation.”
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In Wawanesa, Man., turkey and hog producer Bob Friesen noted the farmgate price he receives for his turkeys now is lower than it was a decade ago.
“And you can be sure my costs have gone up a lot since then,” he said from his farm. “The gross numbers make it look like farmers are making more because we are selling more, but people forget that costs are up and take-home is down.”
They both saw government policy as part of the reason for tough times on the farm.
Safety net spending has fallen sharply but user fees and other government-inspired costs are rising.
“In the new wheat board bill, there will be a contingency fund that will be a cost to farmers,” said Scarlett. “Here in Alberta, they want to charge commercial rates to license farm trucks. That could cost between $1,500 and $5,000 a farm.”
The analysis of farm income trends by Agriculture Canada economists offers vivid evidence of the declining government support for farming across the country and faltering net income.
In 1996, net cash income fell eight percent to $5.5 billion. When depreciation charges are added, realized net farm income of $2 billion was 25 percent lower than year-earlier levels and almost 20 percent below the average of the 1990s.
A major factor in the trend is declining government support.
From a high of more than $9 billion in federal and provincial spending in 1991-92, governments this year are expected to spend about half as much.
And now that Ottawa is out of the grain transportation subsidy business, the federal share of government spending on agriculture has fallen to close to 50 percent from a 1980s high of more than 70 percent.
By province, Alberta’s farmers receive proportionately less government support than farmers anywhere else in the country.
Last year, federal and provincial transfers to farmers in Alberta were worth 12.78 percent of the value of goods produced on the province’s farms.
The Canadian average was 17.99 percent, although as recently as 1991-92, government support was worth almost 31 percent of the value of farm production.
In the other western provinces last year, government support was worth more than 19 percent of production.
Meanwhile, farm debt last year rose almost six percent to $27.2 billion.
“From 1984 to 1994, it increased by 13 percent,” said the federal analysis. “From 1994 to 1996, farm debt increased by about 11 percent.”
During that same three-year period, farm cost-of-production expenses rose 13.5 percent to $26.5 billion.
“In a way, we are getting pinched from both sides,” said Friesen, vice-president of the Canadian Federation of Agriculture. “The government has cut supports, safety nets are inadequate and cost recovery is increasing. This is being felt on the farm for sure. It isn’t just statistics.”
