Last week began with the latest Canadian farm income outlook delivered by Agriculture and Agri-Food Canada, a report that by most accounts was pretty bullish on farm income projections for the next 10 years or so.
In fact, it was the kind of report that is likely to have the farming community squirming for a couple of reasons. Firstly, farmers are inherently nervous about good-news stories that make them appear wealthy and secondly, the source of that wealth might come under scrutiny.
In addition to the analysis on how various commodities, input costs and output performed in 2010 and 2011, the federal report offered glimpses of other measures of farm financial performance.
“Those indicators suggest a positive situation. Average total income of farm families, which includes non-farm income, is forecast to reach $109,216 in 2011. At the same time, average net worth per farm is expected to reach $1.6 million, a 44 per cent increase over five years.”
But then the report offers this bit of information: “The average family farm with sales under $250,000 is expected to earn most of its income from off-farm sources in 2010, while family farms with over $250,000 in sales are forecast to receive a greater portion of family income from the agriculture operation.”
When it outlines the 2011 projections, the report tells us that of the expected $109,216 total average farm family income, which is 18 per cent above the five-year average, $88,288 is coming from off-farm sources, which is an increase of 21 per cent relative to the five-year average (2005-09.)
In other words, in good economic times you’d expect farmers to rely less on “other family income,” but in fact it is increasing faster than farm incomes.
“In 2011, the average farm family is expected to earn a larger portion of its total family income from non-farm sources than farm sources in 2011,” the report tells us. “Cattle farm families are expected to earn three per cent of their total family income from farm operations while grain and oilseed farm families are expected to earn 23 per cent of their total family income from farm operations.”
The tables in the report break out farm incomes on the basis of farm market receipts, program payments, farm expenses and net operating income, year by year, and as a five-year average. Net operating income is market receipts minus expenses plus program payments.
As a sector, Canadian agriculture earns 54 per cent of its net operating income from program payments.
In grains and oilseeds, 50 per cent of the net operating income over the five-year period ending in 2009 came from program payments. For hogs, it was 168 per cent, cattle 147 per cent, and potatoes, 59 per cent. Dairy is 13 per cent and poultry comes in at 11 per cent.
Non-farming Canadians can read several messages into these numbers. On one hand, they were told by farm organizations in the bumph surrounding Food Freedom Day Feb. 12 that food costs them 11.8 per cent of their family income. But that’s only including what they pay at the grocery store. Their tax dollars are also involved.
And given that the average Canadian family earns about $75,000 annually, the thought of subsidizing farm incomes to the tune of $109,000 might be a bit disconcerting to some.
Secondly, Canadians are frequently told supply management is costing them dearly at the grocery store. But when compared to what it costs farm programs to keep the other export-oriented commodity sectors afloat, it perhaps isn’t such a bad deal.
Now before you pick up the phone or fire off an email to complain to this desk about lies, damned lies and statistics, hear this: we don’t have an issue with farmers making money.
There may well be plausible rationales behind these numbers. They might be a factor of specific environmental or market conditions within the period measured. It might relate to how the statistics were collected. Some of that non-farm income undoubtedly comes from one or both spouses working a second job — a reality with which other Canadians could identify.
The point is, these numbers are out there. Farm groups had better have those explanations ready.
In a cryptic news release last week, the Grain Growers of Canada indicated that negotiations to have grain companies handle wheat board grain weren’t going too well, and suggested that regulations might be needed to make the companies play nice.
We recognize that the Harper government has a free rein to do most anything it wants, but we haven’t quite figured out how it can create its own grain company and then justify forcing privately owned competitors to do business with it.