Ag industry needs government help

How bad are things on the farm these days? Consider this information from an article by Ron Friesen in The Manitoba Co-operator.
More than three out of every four dollars (77 percent) that Canadian producers netted in 2004 came from the government, not from crops and livestock.
But that’s not so bad. Things actually are getting better. In 2003, government payments stood at 103 percent of net farm income.
Farmers may be excused for feeling a little sarcastic after studying the latest farm income figures released by Statistics Canada last week. But sarcasm aside, the figures tell the story of an industry that, overall, requires government support because it cannot earn a profit from the marketplace.
Reading the Statistics Canada news release, you’d think things were positively rosy.
“After two years of decreases following back-to-back droughts and the closure of the U.S. border to live cattle exports, net cash income—the difference between a farmer’s cash receipts and operating expenses—rebounded to $6.3 billion in 2004,” said the bullet on the front page of the release.
That sounds like a lot of money and, of course, it is. But let’s take a closer look. Of the $6.3 billion in net cash income, $4.8 billion came from government program payments.
Take away those payments and farmers netted just $1.5 billion from sales of crops and livestock minus operating expenses.
There are roughly 156,000 farms in Canada with annual sales over $10,000, according the latest census. Which means that, excluding program payments, the average commercial farm in this country netted just $9,615 from commodity sales in 2004.
And that was a good year.
Crops produced generally favorable yields following two-straight years of crippling drought in the west. Hog prices were at record highs. Cattle return, while still depressed, were much better than in the BSE year of 2003.
By contrast, 2003 was the worst year on record for farm income. That year, realized net farm income in Canada (cash receipts minus expenses and depreciation) was actually negative.
So 2004 was better. Still, the fact remains that an unacceptable portion of farm income is coming from program payments, not from the marketplace.
What’s the solution. Is it higher grain prices? An open U.S. border to Canadian cattle? A new World Trade Organization trade agreement? Or is it more of the same?
Europe subsidizes farmers massively with public acceptance. New Zealand, on the other hand, did away with farm subsidies cold turkey years ago.
Canada ranks somewhere in between the two extremes.
Some believe the only way agriculture is going to survive in this country is to increase the level of support from government—even though that is exactly opposite of what they would like.
< *c>Dates to remember
•July 26—R.R. Soil and Crop tour; and
•July 27—Emo research station open house, 7 p.m.