Record levels of government support for farmers are not sustainable, prairie farm leaders warned last week as the federal government announced that during the first half of 2005, almost one in five dollars in farm revenue came from public coffers.
To the end of June, total farm cash receipts were a record $18.9 billion, according to a Statistics Canada report Aug. 25.
Market returns of $15.5 billion were at 2004 levels as higher livestock revenues offset a $632 million drop in the value of crop sales because of lower grain prices.
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Program payments were a record $3.386 billion during the six months. The payments came from the 2003 program year for the Canadian Agricultural Income Stabilization program, the September 2004 government support announcement for the livestock sector and higher crop insurance payments.
“Farmers are living on government payments and depreciation and it is not sustainable,” said Manitoba farm leader David Rolfe, president of Keystone Agriculture Producers.
“Many taxpayers unfortunately will use this to see farming as a basket case without seeing the broader industry it supports.”
In Edmonton, Wild Rose Agricultural Producers executive director Rod Scarlett said the program dependence should be a wake-up call to governments, farmers and the public that market returns must improve.
“Farmers most definitely would agree that government support is now at unsustainable and unacceptable levels,” he said. “It is demoralizing and it is sometimes demeaning and it affects virtually all sectors.”
The Statistics Canada report said sharp drops in revenue from wheat, barley, canola and corn sales dragged down crop receipts.
“Increased production in major exporting countries in 2004 continued to weigh on prices of grains and oilseeds in the first half of 2005,” said the agency analysis. Last year’s early prairie frost and wet weather also lowered the quality of the crop.
Cattle and calf sales produced revenues of $2.8 billion, almost 18 percent higher than last year’s level and overall, livestock receipts were up 7.5 percent to $8.9 billion. Statistics Canada said a nine percent increase in sales of cattle and calves because of increasing domestic slaughter capacity was a factor in higher revenues.
But the big story in the first half of the year was a $726 million increase in program payments to bring six-month support levels 90 percent above the five-year average.
“We’re clearly in a crisis at the farm level and the market is not sustaining us,” said Agricultural Producers Association of Saskatchewan president Terry Hildebrandt.
“And despite their increase, we’ve been saying for a long time that government dollars are not enough to fill the hole. We need new strategies to allow farmers to make more dollars from the market,” added Hildebrandt.
He said a legislated minimum level for ethanol, as exists in the United States, would create new markets for farm produce and farmer-owned ethanol plants. Ideas are needed such as paying farmers for environmental services and selling hunting rights on farm properties to outfitters.
“All these things we need to look at,” Hildebrandt said Aug. 25 on the way to a Lumsden, Sask., meeting with federal Liberal MPs and cabinet ministers. “Right now, farming is on the slippery slope.”
The farm leaders also noted that while market revenues are stuck at last year’s levels, input costs have soared this year with massive increases in petroleum prices affecting fuel and fertilizer prices. It means net farm income will be much lower.
“When you see that shocking portion of gross income that program payments represent, imagine what net income will look like when costs are taken out,” said Rolfe. “Farmers do not want to be dependent on government but the market is not working. It is distorted by support and overproduction in other countries.”
