A toxic combination of low inventories to sell, softening prices, a strengthening Canadian dollar and sharply rising production costs will produce a tough economic year for many prairie farmers, Agriculture Canada projects.
In its latest farm income forecast, the department suggests realized net farm income nationally will fall 19 percent this year and a full third from 2001 levels.
Hardest hit will be Saskatchewan, where realized net income is expected to fall more than 50 percent from last year and two-thirds from 2001 levels.
Alberta’s projected decline from 2002 income levels is 61 percent, although 2002 income was inflated by the forced selloff of some livestock because of the drought.
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Manitoba is predicted to fare better with only a 13 percent drop in realized net income and higher returns than the average of the past five years.
“That outlook is devastating,” Saskatchewan farm leader Terry Hildebrandt said in an April 28 interview. “It’s going to put a jam on our whole economy.”
The president of Agricultural Producers’ Association of Saskatchewan said the projection is hardly a surprise, considering last year’s drought in parts of the province.
“It’s going to be damned tight in some areas this year.”
Canadian Federation of Agriculture president Bob Friesen said the income projections are “discouraging” because they will help set the historic reference base for future support levels.
“It’s really bad news,” he said from his Manitoba farm April 28. “It doesn’t ever seem to turn around.”
The low-income projections for the two prairie provinces come despite Ottawa’s expectation that program payments – including crop insurance and $600 million in federal transition funding – will be at record or near record levels this year.
Saskatchewan farmers are expected to receive more than $1.4 billion in program payments, almost three times the average of the past five years. Alberta can expect more than $1 billion in program payments.
Meanwhile, farmer withdrawals from Net Income Stabilization Accounts are projected to be down this year, although Saskatchewan and Manitoba farmers are expected to withdraw more than they deposit.
Nationally, the department says farmers will withdraw less than half the $1.4 billion that will be triggered and will end the year with NISA totals of almost $4.5 billion.
The year-end balance in Saskatchewan is projected at almost $1.5 billion and in Alberta at $853 million.
The government also predicts that operating costs will rise by five percent nationally this year, eight percent in Saskatchewan and 10 percent in Alberta.
“The costs of fertilizer, crop insurance, fuel, so many things are going up,” said Wild Rose Agricultural Producers president Neil Wagstaff. “Income varies. Costs that go up don’t always seem to go down.”
In Ottawa, agriculture minister Lyle Vanclief noted that nationally, income projections for 2003 are higher than the five-year 1997-2001 average, but he conceded that some provinces have a more depressed outlook.
He used it as another chance to promote the agricultural policy framework.
“We know the cost of business is increasing in every sector of society,” he told reporters April 28. “That’s why it’s important that the investment we put forward in the APF is there … to help producers increase their profitability and stabilize those increases into the future.”
