The Alberta farm sector is poised to join most of the rest of the province’s economy this year as it sinks into deficit and financial uncertainty, Agriculture Canada economists project.
The 2009 farm income predictions issued by the department last week suggest realized net farm income in Alberta this year will tumble to a $227.5 million loss compared to a positive $381.5 million in 2008. Depreciation charges are included.
The average net operating income on an Alberta farm (income minus expenses) is projected to fall 25 percent this year to about $28,000.
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Agriculture Canada projects Saskatchewan farmers will have a $1.756 billion realized net income this year, $250 million more than in 2008. Incorrect information appeared on page one of our Feb. 26 issue. |
A projected $400 million drop in crop receipts and a decline in program payments of more than $250 million are the major culprits.
By contrast, realized net farm income in neighbouring Saskatchewan is predicted to more than quadruple this year to $325 million from $62 million last year, partly because of a 41 percent increase in program payments.
It represents an average net farm operating income before depreciation of $42,529.
Manitoba farmers are projected to have an aggregate realized net farm income of $325 million, boosted by a 41 percent increase in program payments, while the British Columbia farm sector could face a $61 million overall income loss.
The government cautions that the final numbers could be different because of volatile commodity markets and prices and general economic turmoil. Individual farm performance often will vary from provincial averages.
The conflicting expectations about provincial performances are part of a generally optimistic national farm income forecast for 2009.
The Agriculture Canada analysis said national realized net farm income will rise by four percent this year to $2.6 billion, mainly because of an expected three percent decline in expenses.
Nationally, program payments are projected to increase marginally to $4 billion and without these, farm realized net income across the country would show a loss of $1.4 billion, according to the projection.
The prediction of declining input costs is based on the assumption that farmer fuel bills will fall 28 percent this year while fertilizer bills will go down 14 percent.
“The current crisis in the world financial markets, combined with recession fears, is having a significant impact on the energy and fertilizer industry,” said the federal analysis. “Fuel and fertilizer prices have declined significantly since October 2008.”
Record low interest rate levels also will help moderate the increase in servicing charges on Canada’s ever-growing farm debt, although the low rates do not help producers with fixed rates from earlier borrowing arrangements.
As usual, with its heavy reliance on supply-managed production and the richest, most comprehensive array of farm programs in the country, Quebec farmers will fare the best this year.
The federal analysis projects that despite a 13 percent drop in program payments to $832 million, realized net farm income for Quebec will increase eight percent to $676 million. On an average farm, that represents net operating income of $61,112 before depreciation.
Next door in Ontario, with market receipts of more than $9 billion, almost 50 percent higher than in Quebec, program payments are projected to be almost $200 million lower. So realized net farm income for Ontario will be $52.3 million. On an average farm, it will represent net operating income of $32,000 before depreciation charges push most farmers into the red.
The federal analysis says the average farm with gross revenues of less than $250,000 can expect to make less than $30,000 from the operation without factoring in depreciation charges.
Farms with gross revenues of between $500,000 and $1 million will have a cash flow profit of $115,801, while the largest operations with revenues topping $1 million will show a black cash flow bottom line of more than $250,000.
