When southwestern Manitoba grain and oilseeds producer Gordon White heard about the Statistics Canada report last week that farm incomes had rebounded sharply in 2004, he wondered what industry was being described.
“That sure isn’t reflected where I’m farming,” the Hartney area farmer with 2,000 acres of grain and oilseeds production said in a May 30 interview. “With the frost and the low prices, last year was worse for me than ’03.”
White said claims of a record $4.9 billion in program payments also came as a surprise.
“There have been some payments but really, they are a drop in the
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bucket. Returns in 2004 were well below feasible.”
Statistics Canada reported on May 25 that 2004 was a comeback year for Canadian farmers after one of the worst years on record in 2003.
“After two years of decreases following back-to-back droughts and the closure of the U.S. border to live cattle exports, net cash income – the difference between a farmer’s cash receipts and operating expenses – rebounded to $6.3 billion in 2004,” the agency said.
The implication was that farm incomes were back to within one percentage point of the five-year average.
Farm leaders, and even Liberal MPs, were outraged by the message of farm recovery.
Statistics Canada made the point that not every farm experienced an income increase and the net cash income number did not take into account depreciation or inventory change.
Taking $4.5 billion of depreciation out of the total reduced realized net farm income to $2 billion. Considering the government calculation that farm revenues were boosted by a record $4.9 billion in program payments, it means that realized net farm income represented only 40 percent of government payments.
And both Saskatchewan and Prince Edward Island recorded their second consecutive year of overall farm sector loss.
“It does not represent anything like a partial U-turn that is needed,” said Canadian Federation of Agriculture president Bob Friesen.
“Income still was below government payments. In the West, farmers were selling off inventory and still the numbers are bad. I resent Statistics Canada trying to sell this as a good news report. This is no rebound.”
National Farmers Union president Stewart Wells said he will recommend that the NFU ask the federal government to review the way Statistics Canada presents the state of the farm economy to Canadians.
“It certainly isn’t a rosy picture or a break in the income crisis,” agreed Liberal MP Wayne Easter, who is preparing a report on causes and solutions to declining farm income for federal and provincial agriculture ministers. “I think the attempt to highlight the $6 billion was misleading.”
Statistics Canada said a combination of better crop volumes, stronger livestock prices and record program payments contributed to stronger farm incomes in 2004.
And it reported record cash receipts of $9.4 billion during the first three months of 2005, although higher livestock revenues and record program payments of $1.6 billion masked the fact that revenue from sales of grain and oilseeds tumbled.
Highlights from the 2004 farm income report included:
- For the second consecutive year, Saskatchewan and Prince Edward Island farm economies recorded net losses although Alberta rebounded from a $368 million realized net income loss in 2003 to a positive $635 million in 2004.
- Canadian farm debt increased almost five percent, or more than $2 billion to $49 billion.
- Quebec had the strongest realized net farm income outcomes last year, representing almost 40 percent of the Canadian total. Strong provincial government support and a predominance of supply management bolstered the provincial results.
At the George Morris Centre in Guelph, Ont., senior researcher and economist Al Mussell said these results are proof that the present system of commodity production and farmer market weakness is not working. He recommends more farmer contractual ties to other value chain players.
“This is not a cyclical downturn in a functioning economy,” he said. “This is a catastrophe. When you have a situation that over two years total farm income is less than total farm expenses, there is no other word than disaster.”
