In 2007, despite a 13 percent increase in farm cash receipts, billions of dollars in taxpayer-supported payments still were needed to keep agriculture in the black.
Statistics Canada has reported that realized net farm income, calculated after depreciation and production expenses are deducted, doubled to $2.2 billion compared to 2006.
However, program payments of $4.1 billion mean that without support payments, the sector that produced more than $40 billion worth of commodities would have had a national loss of $2 billion.
Farm operating expenses jumped to a record $33.6 billion in 2007, 13.1 percent above the five-year average, pushed up by high fertilizer, feed, fuel, insurance premiums and growing debt servicing costs.
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During the first nine months of 2008, the value of farm sales increased another 12.5 percent to $33.5 billion but program payments also were up.
University of Saskatchewan agricultural economist Richard Gray said the fact that Canadian agriculture for the past two decades has been kept out of the red only by program payments and taxpayer support is a sign of an underlying problem.
“There is a clear indication in the last 20 years that our sector has not been competitive in global terms,” he said. “Yet we continue to concentrate most of our public spending and support on safety nets that preserve that uncompetitive structure instead of investing in things that will lead to an increase in innovation and research. That is where you tackle competitiveness.”
Canadian Federation of Agriculture vice-president Ron Bonnett said the numbers reflect the market power of the input suppliers and that agriculture is a volatile industry. High grain and oilseed prices are being offset by low livestock prices.
“This really is a message that there are not adequate profits in this industry,” he said. “When you have $40 billion in sales, you should be able to show $4 billion in profits. The fact that is not happening is a message that we need to continue with strong safety net programs that work for producers.”
The National Farmers Union saw it as the latest example of powerful agribusiness firms using concentrated market power to take most of the benefit when farm commodity prices increase.
In a news release, it complained that Statistics Canada described the 2007 results as a strong rebound for farmers from 2006 levels while neglecting to note that it was because of public support programs.
“Farmers’ net income from the sale of their commodities in the market alone, not counting taxpayer-funded subsidies, was deeply negative in 2007,” said NFU Ontario co-ordinator Grant Robertson.
He noted that even with subsidies, realized net farm income in the Atlantic provinces fell last year.
The Statistic Canada report also noted that realized net farm income in British Columbia increased to a negative $107 million from negative $86 million in 2006.
Robertson said farm subsidies really should be called corporate subsidies.
“The income farmers receive goes directly to pay their bills,” he said in the release. “Inputs, particularly fertilizer and fuel, have been exceptionally expensive. It’s also a subsidy to processors and exporters who are able to keep paying low prices for commodities under this system.”
