OTTAWA — Despite sharply falling government support, the financial picture for Canadian farmers continues to improve, government figures suggest.
Statistics Canada reported strong revenues from sales of canola, other crops and livestock offset a 45 percent decline in program payments during the first three months of 1994.
At just under $6.6 billion, farm cash receipts in the first quarter were a shade below record levels set last year.
It was the same story last year.
Statistics Canada reported that net farm income last year reached a record $3.9 billion because of higher market returns and increased inventory values.
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Realized net farm income, which counts cash income but not inventory values, fell slightly to $2.8 billion last year because of lower government payments and higher operating costs.
Still, 1993 farm income levels were high by historic standards and offered supporting evidence to the contention by government officials and agricultural economists that the fundamental financial condition of the farm sector is improving.
Most of the improvement is coming from the market. Government program spending on the sector is falling, down 31 percent to $2.2 billion last year.
During the first quarter of 1994, the decline in government support continued with program payments down 45 percent from last year to $648 million.
There were several statistical indications of the impact of this improved financial health in the sector.
The inflation-discounted rate of return on assets last year was 4.2 percent, the highest recorded since the calculation started in 1981.
And farmers apparently used some of the money to pay down their debt. Farm debt outstanding declined by almost $1 billion last year to $22.7 billion — a four percent decrease in a debt level that has been stuck close to $24 billion for half a decade.
Statistics Canada economists reported that the 59 percent increase in net farm income put the total at a record $3.9 billion.
“This was the second consecutive strong increase as total net income has more than doubled from its low 1991 level,” they said.
One of the few negative economic indicators in last week’s Statistics Canada announcements was that the cost of farming rose last year far faster than the general inflation rate.
Farm expenses and depreciation charges rose 2.8 percent to a record $21.9 billion, despite lower interest rates.
Higher fuel and feeder calf costs combined with reduced levels of government expense rebates to increase farm operating costs.
