Going down: the true farm income picture

Farmers have seen their wealth creation scooped up by others for decades

Going down: the true farm income picture

Farm income up in 2019” was the front-page headline in the June 4 Co-operator. Though superficially true, a closer look at the numbers demonstrates the opposite, and reveals a troubling picture.

How we measure and report farm income matters. Net cash income, the measure used in the June 4 story, omits depreciation — the value of machinery and buildings. Realized net farm income is a superior measure because it includes depreciation and therefore gives a clearer picture of what’s really happening on our farms. Canadian realized net farm income for 2019 was $4.9 billion, up from $4.4 billion in 2018. But what looks like “better times” for farmers was actually lower market returns papered over by higher support-program payments.

However, the best indicator of how well farmers are doing in the marketplace is to take Statistics Canada’s realized net income data and subtract program payments. This gives you “realized net income from the markets” — without the masking effects of support programs. By that measure, Canadian farmers’ net incomes fell: from $3.2 billion to $2.8 billion.

To put these numbers into perspective it’s useful to look at long-term trends. The graph below shows 94 years of Canadian gross farm revenue from the markets (top line) and realized net income from the markets (bottom line), adjusted for inflation.

Gross revenue and realized net farm income, from the markets, 1926–2019. photo: Source: Statistics Canada

Several things are evident:

  • Net income from the markets has been relatively modest in recent years;
  • 2019 marked the fifth straight year of net income decline and the lowest level in the past nine years; and
  • The gap between gross revenue and net income is widening — agribusiness input suppliers are taking an ever-larger share of the wealth farmers create.

Worse, both lines on the graph have been pushed upward because significant cannabis revenues and net income are included in the 2019 data. Cannabis contributed $2.3 billion to “farm” revenue and, though numbers are not yet available, perhaps hundreds of millions of dollars to net income. Without cannabis profits, the drooping net income line would probably look even sadder.

Coming back to farm-support payments, those are now a chronic part of the farm income situation, in bad years and “good.” In 2019, 40 per cent of farmers’ realized net income came from taxpayers. Transfers to farmers since 1985 total $110 billion. Anyone who wants to call the period beginning in 2008 “good years” should explain to taxpayers why farmers needed $22 billion in support over the past dozen years.

Finally, the elephant in the room: debt. During these “good years,” debt has spiked, reaching nearly $115 billion in 2019, double the level in 2000. Having risen for 25 years straight, debt is on track to reach $170 billion this decade. As the Co-operator highlighted, interest costs are huge: $4.2 billion in 2019.

Why is it important to correct the record regarding farm income? To begin an honest conversation about what’s really happening in Canadian agriculture. Why have two-thirds of young farmers been pushed off the land since 1991? How is it possible that farm-input companies and service providers have captured 95 per cent of wealth generated by farmers since 1985? Why, when input corporations charge more and grain and livestock buyers pay less, do inadequately courageous farm organizations go running to governments and taxpayers rather than organizing and demanding fair prices from their agribusiness partners? Talk of “good times” serves to paper over the structural pathologies of corporate-dominated input and commodities markets and to encourage farmers to see their financial difficulties as personal failings: “everyone else is doing OK; you must not be a good farmer.”

The Co-operator’s June 4 cover story was technically excellent — filled with analysis, insights, and solid reporting. Yet it missed the big picture. A careful reading of the data shows that bad times may be returning (we’re certainly headed into the jaws of a farm debt crisis). As we enter year 36 of demanding taxpayer-funded reimbursement for agribusiness wealth extraction, perhaps it is time to organize to gain the agricultural policies we need from governments and the fair returns we deserve from the marketplace.

 – Darrin Qualman is director of climate crisis policy and action with the National Farmers Union.

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