Editorial: Good times, great opportunities

It’s well documented that the pandemic has had an uneven effect on Canadian incomes and businesses.

While some have suffered greatly due to the disruptions caused by lockdowns, others have experienced an unprecedented surge in spending ability, or alternatively, debt-reduction capacity, because of the limits on how and where they can spend money.

Looking back, no one last year at this time predicted the pandemic’s positive impact on Canada’s agriculture sector. In fact, the outlook was decidedly pessimistic, as many anticipated supply chain disruptions that ultimately never materialized.

Related Articles

The latest farm income forecasts issued by Agriculture and Agri-Food Canada tell a very different story, one that puts the sector front and centre as an engine helping to restart the Canadian economy.

Income forecasts for 2020 and 2021 finalized in December show a 21.8 per cent increase in net cash incomes for Canadian farmers to a new record in 2020, with further growth expected in 2021.

The grain sector has led that growth with sales receipts up by 11.9 per cent. The livestock sector, which has experienced delivery disruptions due to temporary plant closures, saw a 1.9 per cent decline.

Net cash income is forecast to grow another 6.8 per cent to $17.6 billion in 2021. Expenses are expected to increase too, but to a much smaller degree.

“Average farm-level net operating income is forecast to increase 8.5 per cent to approximately $103,000 per farm, and average farm family income is forecast to grow 7.2 per cent to just under $208,000. Net worth is forecast to reach $3.5 million per farm, up 2.9 per cent from 2020 levels,” the report says.

All sectors, even those hit hardest by the pandemic, are showing positive gains in the measures used to assess their financial health. While industry averages don’t reflect the on-farm reality for individual operators, this forecast predicts more than 70 per cent of Canadian farms will report positive net operating income in 2021.

The government isn’t kidding when it says agriculture is an economic engine. Much of our country’s economic riches are based on taking resources that already exist and making them into something else; farmers actually create new wealth by multiplying one seed into many.

Whereas the pundits fear Canadian households that have money in savings for the first time in a while will be reluctant to spend it, the one thing we know about farmers is that they abide by the creed “have money, will spend.”

Anecdotal reports from equipment and half-ton dealers are that inventory is sold out. Used equipment sales are booming and many are watching for land prices to start rising. Farmers are looking to replace, rebuild and expand their holdings. With interest rates remaining at historical lows, it’s unlikely debt reduction will be a high priority.

There might even be the occasional farmhouse built. In my own family lore, the 2.5-storey brick farmhouse still standing on the original homestead was purchased from the Eaton catalogue and built after the bumper 1916 wheat crop.

More than half of Canadian farmers are over age 55, so some may see this boom as an exit strategy. Others will be looking to get in.

Still others will see this as an opportunity to position their farm for the future, which is where government policy plays a role.

Farmers are on both sides of the climate change conundrum. They are part of the greenhouse gas problem as emitters, largely because of the fertilizer they use. On the other, their soils can remove carbon from the atmosphere and put it to work below the surface, building fertility that reduces the amount they need to buy.

Better understanding and harnessing those biological systems will be the defining challenge of this century, just as getting rid of summerfallow and excess tillage defined the last one.

The industry right now is in a position to invest in the technology, equipment and skills needed to make that transition, yet the economic and policy drivers favour the status quo.

Federal and provincial leaders should move quickly to coalesce around a cohesive carbon strategy. Meanwhile, farm leaders must change their rhetoric around carbon taxes punishing hard-pressed farmers or risk losing all credibility with the public.

Under the right parameters, carbon pricing is an asset to the agricultural community, not a liability. Let’s make it so.

What are we waiting for? A drought?

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]

Comments

explore

Stories from our other publications