If last week’s dire predictions for prairie farm income over the next five years sent a chill through the farm community, many industries that serve farmers also felt like they might be catching a cold.
Agriculture Canada projected that realized net farm income in Saskatchewan will be a negative number this year and struggle above the break-even point from 2001-2003. It was bad news for the farm input industries as well.
Fertilizer companies, machinery manufacturers, crop protection product companies and financial lenders all would feel the effects.
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“The focus here is naturally on farmers,” said Prairie Implement Manufacturers’ Association president Larry Schneider, in a July 22 interview from Regina. “But the industries that depend on farmers also would feel the impact.”
Input sector down
Already, farm equipment sales this year are off sharply from last year’s poor results.
“This will make it worse,” said Schneider.
University of Guelph agricultural economist George Brinkman noted it is difficult to forecast costs because farmers facing difficult times often react by reducing inputs.
“That can change net farm income numbers, but of course it
isn’t good for the input industry,” he said.
Agricore president Charlie Swanson worried that publishing such negative projections could hurt Manitoba and Saskatchewan farmers when they go to their lenders looking for operating or even expansion investment financing.
“This is a very public message that farmers on the Prairies are in serious trouble,” he said in a July 23 interview from Winnipeg. “That message will be picked up by the financial community and this means they will be taking a second look at how they support us.”
Brinkman said the projections are part of a longer-term trend.
“Agriculture has been a tough industry to be in, in Canada and around the world,” he said. “Collectively, farmers have not done as well as the rest of the economy. And we are not seeing any evidence that there will be a huge turnaround soon.”
Still, he noted the figures are general. Not all farmers will be losing money or barely breaking even.
“We have viable farmers in Canada who can compete with anyone in the world and who will do all right,” he said. “However, up to two-thirds of our industry cannot make it on just farming. It raises the issue about the mix of policy structures that are needed to deal with that.”
