Much of the prairie farm economy is becoming a black hole of economic losses and 2005 is projected to be one of the worst years on record, according to analysis published Feb. 17 by Agriculture Canada.
Farm leaders immediately warned that governments can expect pressure for farm support to keep the sector going until market returns improve.
Next week in Toronto, thousands of farmers are expected at the Ontario legislature March 2 to demand $300 million in emergency provincial funding.
Canadian Federation of Agriculture president Bob Friesen said in a Feb. 21 interview that governments across the country can expect the same.
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
“These numbers are very, very brutal and governments are going to have to realize that the agriculture industry is barely limping along despite record program support and so more support is needed until we make that U-turn we all want on market returns,” he said.
The overall message from the department last week was positive, although agriculture minister Andy Mitchell conceded there is little to cheer about in the latest numbers.
“We are seeing improvement but let’s not hide the fact that these numbers are not great numbers and I don’t think anyone wants to pretend they are anything but difficult numbers for Canadian producers,” he said in a Feb. 17 interview.
National projections for 2004 suggest that realized net farm income, after depreciation, rebounded from a net loss in 2003 to $1.6 billion. The returns were buoyed by what the government reports as a record $4.9 billion in program payments.
However, the rebound was mainly in Alberta where realized net income went from $-412.4 million in 2003 to $795.1 million in 2004, according to the departmental analysis.
Saskatchewan, Ontario and Prince Edward Island farm economies all lost money last year after depreciation is taken into account.
This year promises to be worse as Manitoba also is projected to slip into the red to join Saskatchewan, Ontario and P.E.I.
The federal numbers calculate that during the three-year 2003-05 period, the Saskatchewan farm economy will have lost an accumulated $900 million.
“That number is just incredible,” said Friesen.
“And I actually think it’s worse. I don’t think those numbers really capture the full impact of the August frost.”
The federal numbers project a decline in the value of Saskatchewan on-farm inventory of more than $900 million between 2004 and 2005.
Conservative agriculture critic Diane Finley also challenged the accuracy of the 2004 projections, suggesting in an interview that the inventory numbers may use the model adopted by the Canadian Agriculture Income Stabilization plan that does not adjust inventory values through the year.
“I think we will find 2004 numbers grossly over-stated,” she said. “That means the need for government support has been understated. There is no doubt the government is going to have to be more aggressive in addressing this.”
In a briefing on the farm income projections Feb. 17, Rodney Myer of Agriculture Canada’s farm income and program analysis division said the better results for 2004 are rooted in several factors.
“The causes for substantial improvement in farm income include a significant increase in grains and oilseeds marketings, much stronger North American hog prices and record high program payments.”
In 2005, the department projects realized net farm income to fall to just over $1 billion nation-wide, a 34 percent decrease, and that is based on some optimistic assumptions Ñ a U.S. border opening to live cattle trade and an 80-cent dollar among them.
The higher the Canadian dollar rises, the less income Canadian farmers receive for products that often are priced in American dollars.
Myer said the department did not have an estimate of the impact of a higher dollar. The dollar has been higher than 80 cents for months.
“We’re not dollar forecasters at Agriculture Canada,” he said. “We took that dollar forecast from the five big banks. Whether its 80 or 85 or 75, that’s a big risk factor.”
