LETTER FROM ONTARIO
Canadian farm income withered in 2002

Farm & Countryside Commentary by Elbert van Donkersgoed

Editor's NOTE

Elbert van Donkersgoed is the Strategic Policy Advisor of the Christian Farmers Federation of Ontario, Canada. CFFO is supported by 4,500 family farmers across the province of Ontario.

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December 8, 2003: Overall, for 2002, Canadian total farm cash receipts of $36.0 billion were 13.2% higher than the previous five-year average, according to a Statistics Canada report last week. An encouraging statistic-- but you would be totally misled about the financial health of the business of farming in Canada if that was the only number you considered important.

Knowing the total amount of money coming up farmers' laneways from sales is not even half the story. What has happened to farm operating expenses and what was sold to earn all that cash are just as important. Statistics Canada told the whole story and it was bleak: 2002 was the worst year in more than 30 years for the money Canadian farmers had left over after operating expenses. For some growers in Alberta and Saskatchewan the situation was worse than in the Depression of the 1930's.

To keep that $36.0 billion coming, farmers not only sold their 2002 crops but also liquidated crop inventories and sold off livestock numbers.

You may recall the effort last year to truck and train hay to the west to help those who faced liquidating prized cattle herds due to lack of hay and pasture. Drought hit large parts of Saskatchewan and Alberta for a second year in a row; farmers responded by trimming the national cattle herd by 4.3%; the Alberta herd, the biggest in the country, was cut back by almost 8%.

Back-to-back droughts on much of the prairies have forced farmers to rely on crop inventories to keep cash income ahead of expenses. Farmers sold off crop inventories worth almost $1.5 billion in 2002. Farm-owned stocks of major grains have now dwindled to extremely low levels.

Meanwhile farm operating expenses have continued to nip up -- another 2.1% in 2002.

What really counts in all these numbers is what farmers have left over to pay down the mortgage, re-invest in the future of their businesses, and pay for family living expenses - their total net income. In 2002, the total net income of Canadian farmers collapsed by more than 50% from 2001 to just $1.3 billion - the lowest in more than 30 years. In Ontario, total net income crumpled by 45%. In Alberta and Saskatchewan total net income was completely wiped out.

These numbers tell it all. There is an urgent need to implement the Canadian Agricultural Income Stabilization program with its better focus on need than previous programs such as the Net Income Stabilization Accounts.

Needs shift—2003 has beef markets in total turmoil, pork prices well below cost of production and all our exports struggling with a strong dollar. Safety net programs that shift according to need are essential to farming's future.

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Statistics Canada's report on net farm income for 2002

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