Outrage over farm income statistics cuts both ways

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Published: June 9, 2005

THE significance of farm income statistics clearly lies in the eye of the political beholder.

Last year, when both Agriculture Canada and Statistics Canada reported perhaps the worst farm income result in Canadian history for 2003, farm leaders took it as gospel. They generally said the numbers were credible and proved their point about farm sector devastation and the need for help.

This year, when Statistics Canada reported a sharp rebound in net cash income (receipts minus cash expenses) to more than $6 billion in 2004, farm leaders cried foul, suggesting the federal agency was trying to mislead by making the farm income picture brighter than it is.

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In their defence, Statistics Canada officials say they use the same measures every year so year-to-year comparisons are valid.

They report first net cash income, then “realized net income” that adds income-in-kind and deducts depreciation, and then a final figure that throws inventory value changes into the mix.

Farm leaders and some economists insist the most accurate and valid measure is “realized net income” that deducts depreciation because farmers must set money aside for aging and depreciating equipment or they simply are living off their equity. For 2004, realized net income is a little less than $2 billion, far less than the $6.3 billion reported in net cash income. As well, realized net income is far less than $4.9 billion reported in program payments.

“It is totally inappropriate for Statistics Canada to make it look like farmers have had a big windfall because it is not the reality,” said Canadian Federation of Agriculture president Bob Friesen.

Liberal Wayne Easter, who is trying to find a way out of the low farm income conundrum, agreed.

“I just think a report like this that alleges a turnaround that hasn’t happened just adds to the cynicism and the misunderstanding among the general public about farmers and whether they really need the help they are receiving,” said Easter.

It makes you wonder why government agencies publish material as volatile and politically charged as farm income.

It makes you wonder if there is any way to depoliticize these reports or to treat them as something other than a report on how you are doing on your farm.

When farm leaders want to bolster their case for better farm support programs, they embrace bad-news statistics. When the numbers point to a different conclusion than the farm lobby supports, they are rejected with bombast.

In truth, the farm income numbers are meant to be a broad indication of how the agriculture and food sectors are doing, not an accurate description of each farmer’s situation.

Perhaps the agency could be more sensitive to the fact that its reports are fodder for the political debate and explain more clearly what they are and what they are not. The agency should explain how the numbers could look so much better when farmers report continuing misery.

Perhaps farm leaders could give the

numbers less credibility but more context by explaining clearly why they do not tell an accurate on-farm picture.

At the very least, farm leaders should sit down with agency number crunchers to try to find a better way. The present system does a disservice.

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