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Finding A Better Farm Story

One of the hardest jobs for a newspaper editor is deciding each week’s front-page lineup.

Generally speaking, the stories chosen should carry some special significance that makes them newsworthy; they need to be unique, unusual, or just plain interesting.

That’s how a rather mundane story about dairy farming wound up on the front page of this paper recently.

It was the lack of crisis that made the story notable. This sector of agriculture is consistently doing well – delivering high-quality products to the consumer, while providing a good income along the value chain.

And that includes farmers.

Putting it on the front page is bound to get us into trouble. The quickest way to light up the switchboard with angry denials is to publish a story about good times in farming.

Secondly, there are many who believe Canada’s protected supply-managed dairy and poultry producers are impeding a new world trade deal that would benefit the 90 per cent of farmers in this country who rely on export markets.

This presumes that Canada’s position on supply management is in fact a roadblock, that trading it away would bring about tangible improvements in global market access and that increased market access would result in higher farm gate returns. Based on past experience, these assumptions are theoretical, bordering on theological.

In fact, farm income stats would suggest increased market access might further diminish farm gate returns.

Why? Because farm expenses, at least in the case of cattle, hogs and grains, routinely exceed revenues. If these sectors can’t make a buck with today’s sales volumes, it is hard to see how more of the same would improve the situation.

In 2007, cattle farmers averaged farm gate receipts of $185,373. Their expenses were $200,601. Factor in program payments of $17,600 and net farm income was under $2,400. In 2008, receipts of $186,999 were overshadowed by expenses of $207,665. Program payments of $15,589 helped, but average net farm income was still a negative $5,076. It was off-farm income of between $56,000 and $59,000 that carried these families through.

Ah, the pundits say, economies of scale would kick in.

For an illustration of that effect, you won’t find a better example of improvements in productivity than the hog sector. It grew threefold over the past three decades.

As for efficiency, a sow in 1982 produced almost two tonnes of pork. By 2007, the average sow produced almost 2.4 tonnes of pork. Canada’s pork exports have increased by more than 20 per cent over the past five years. It is the world’s largest exporter of pigs.

But is this industry a lean, mean profit machine capable of competing in an expanded global marketplace? There have been some good income years throughout that consolidation and expansion. But average net earnings per hog have been negative for four out of the past six years, even though the sector continues to be the biggest generator of farm cash receipts in Manitoba.

On a national basis, hog farms over the past two years had market receipts of $813,651 and $821,644. Expenses were $908,303 and $945,106 respectively. These hog farms received average program payments of $95,290 (2007) and $119,945 (2008). Their subsidy cheques were equivalent to total farm family incomes (including market, subsidies and off-farm income returns) for grains and oilseed producers.

Yet hog farms in Canada saw a paltry $638 in net farm income in 2007 and a negative $3,517 in 2008. Their total farm family incomes were under $31,000 – hardly a living wage.

Forget the industry’s highly touted contribution to the Canadian economy for just a moment. The question farmers must answer is how increased export dependence improves the farm income situation.

While hog and cattle producers are drowning in what has been called a “perfect storm” of collapsing prices, high feed costs, market disruptions and currency imbalances, the supply-managed sectors of Canadian agriculture are sailing along with hardly a ripple.

Average net farm income for dairy farmers ranged between $90,000 and $99,000 in 2007 and 2008. Income exceeded expenses and program payments were only $21,682 and $15,995. Off-farm income averaged around $20,000. Ironically, the fact that these farmers make money is one of the reasons cited for getting rid of supply management.

Yes, but we are told farm numbers would shrink if Canada implemented supply management across the board – as if that’s not happening anyway.

In Manitoba, there were 14,200 farms producing pigs in 1971. In 2008, there were 910. And they are struggling. The trends in cattle, grains and oilseeds – while not as dramatic – are similar.

It comes down to a choice. Supply management may not be the solution. But it is certainly not the problem.

We would suggest that when the “perfect storm” becomes old news, it’s time to chart a new course. [email protected]

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]



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