At a farm rally in Vanguard, Sask., last week, it took 90 minutes of pleading to get farmers talking about their financial situations.
Sharing information on their bottom lines isn’t easy for most farmers, whether that sharing is with people at a farm rally or with their spouse.
Richard Schoney, a professor of farm management and finance at the University of Saskatchewan, said he once sat down with a farm family to go through their books.
He found they were facing bankruptcy.
“I saw they had clothes and food. I asked if they were getting help from anyone, maybe relatives.”
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Yes, the wife admitted. Relatives were supplying clothes for the kids.
“The husband was shocked. He didn’t know it,” said Schoney. The revelation forced the farmer to acknowledge the farm’s financial problems and to realize the role his wife played in farm and family survival.
Some farmers deny the severity of their financial problems, said Schoney, but usually the person doing the farm accounts understands the bottom line.
Even so, many farmers are reluctant to seek help, and few people know their troubles.
“I’ve been to church with them, and I didn’t know they were in trouble. Only their closest relatives or neighbors know,” said Schoney.
He advises farmers to look at their books and “make hard and sad decisions.”
Selling machinery, liquidating stock, selling land or leaving the farm are options. Such actions could make the difference between saving something for a family’s survival or leaving a farm completely broke.
Unique situation
The prairie farm income problem cannot be generalized, said Schoney, adding 1998 “is incredibly different” from all other years.
“Some farmers have had their worst year ever, but some are not too bad.”
Provincial boundaries, soil zones and Mother Nature play a part. So do different crop and farm management practices.
Those with cattle or canola and may be OK financially, he said. Others may have foreseen the down cycle in hogs and liquidated herds before the price collapse. Every case is different.
Farming is a business “with a margin of pennies … as well as watching the nickels and quarters,” said Schoney.
Statistics Canada farm input numbers give some information on why farmers are struggling with grain prices that are higher than those in 1986-87 or 1990-91.
For grain farmers, about two-thirds of input costs are fixed, tied to land and machinery. Costs for both have increased. Machinery prices have risen 35 percent in Western Canada since 1986.
Costs across the board have generally increased. The Crow Benefit is gone. Many farmers must haul grain further to delivery points. Rural depopulation may mean longer distances to pick up machinery parts and buy supplies.
Grain handling charges have risen because of new standards for moisture content and dockage. There are more and greater environmental charges on oil, filters and tires.
There are new or larger user fees due to government cost recovery programs for services.
Costs have risen for veterinary supplies, farm labor and property taxes.
Then there is loss of deferral premiums, bank charges on operating loans and higher prices for natural gas, electricity, propane and building materials.
“Cost control is paramount, but not glamorous,” concluded Schoney.
