Canadian farmers are the most optimistic they’ve been in four years, according to a survey by the country’s top farm lender, as grain and oilseed prices trade around 2-1/2-year highs.
Seventy-six per cent of the 4,900 farmers and farm business owners that Farm Credit Canada surveyed last autumn said they expect their farm or business will be better off in five years, compared with 70 per cent in the year-earlier survey.
Sixty-seven per cent of respondents said they are better off now than they were five years ago, compared with 60 per cent a year earlier. Prices of crops such as wheat, corn, soybeans and canola rose in the second half of 2010 as too much rain in Canada and Australia and dry conditions in Russia and Argentina cut production or downgraded quality.
Higher crop prices have boosted agricultural equities such as grain handlers and fertilizer producers on thoughts that farmers have more money and incentive to spend.
Hog and cattle futures are also up from a year ago. The Farm Credit survey found that most respondents do not plan to change their capital spending in 2011, but those who do are most likely to spend on equipment, along with input costs such as fertilizer, fuel and seed, and land.
Canada is the third-biggest exporter of beef and pork and usually the No. 6 producer of wheat. Bad weather, one of the main reasons for higher prices, is also a major challenge to farmers. Saturated soil and heavy snowfall in Western Canada have raised the potential for severe spring flooding, which could delay planting and leave millions of acres fallow. Farm Credit said the survey’s margin of error is plus or minus one per cent, 19 times out of 20.