IT IS one of the rules that spring is the season of optimism for farmers, when anything is possible, when good crops are just around the corner.
Each spring, next year country becomes this year country.
Yet a recent cross-country exploration of the state of farm income, why it has crashed and what farmers think can get them out of the trough was anything but a trip on the Optimists’ Express.
Farmers are, if not depressed, at least skeptical about the official optimists’ line that these are abnormal times, that all we need is (pick the solution of your choice): bigger farms, more efficiencies, niche markets, a lower dollar, forward contracting, value-added partnerships, freer trade, a greater government commitment to agriculture.
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They work as hard or harder every year, usually with off-farm jobs. They are battered by rising costs and shrinking margins. They wonder why every segment of the food chain makes more money than they do.
Of course there are optimists and of course there will be years when the weather, the markets and the gods conspire to make agriculture profitable.
These are the folks who will see the farm income series that ends this week as the latest manifestation of the “Western Depressor.” But the numbers tell a story.
According to Statistics Canada and Agriculture Canada calculations of realized net farm income (gross revenue minus expenses and depreciation) and program payments, farm income has exceeded net program payments significantly only five years during the past 13.
In six of the years since 1991, income from programs exceeded realized net farm income and in two years, it was essentially a wash.
It means that in most recent years, without support from government, agriculture would be losing money and in most years, without program support, incomes would be painfully low.
Consider that statistic. This is an industry worth well over $100 billion and that supports hundreds of thousands of jobs. Yet the 100,000 or so farmers who produce most of the raw product that feeds the food industry machine need public support to survive.
It has led some to argue that farmers have become providers of cheap raw products that fuel a profitable food industry, selling cheaply to concentrated buyers while buying inputs from concentrated sellers.
Free trade deals mean Canadian farmers compete at world prices without the government support that competitors receive.
Free traders say the country needs more free trade to allow export of more units. Critics wonder why selling more units at prices below the cost of production is a good business decision.
Optimists say farmers must cut costs, hook up with value-added players and convince governments to reduce regulatory costs.
A generation ago, farmers would have argued that the answer was not to comply with corporate demands for cheap raw product but to organize to extract higher prices out of the market.
These days, the political momentum is all on the side of those who think that central desk selling and market boards are anti-competitive and wrong. Farmers should make it within current market forces or move on.
The Western Depressor steps aside for the Western Reality Check, unless farmers decide otherwise.
