Winnipeg Free Press - PRINT EDITION

Federal budget expected to deal blow to farm programs

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So what do you do when you're a government facing investigation for electoral interference?

You give people something else to talk about, of course, something perhaps just as controversial, but not illegal.

That's why some pundits are predicting the federal budget expected in late March could be even tougher than previously expected, as the Harper government works to give people a healthy reason to be mad at it, instead of over the unfolding robocall debacle.

After all, if indeed this government actually earned its election, it was on the premise of fiscal restraint. So across-the-board budget cuts are expected. The only question is, how deep will they go?

Farmers have particular cause to be nervous. Agriculture and Agri-Food Canada reported recently that times have been pretty good for farmers in recent years, despite some inclement weather and unseeded acres.

In a somewhat befuddling mix of statistics and analysis, the department's latest farm-income forecasts take the unusual step of predicting positive incomes for farmers a decade into the future, even though its analysis of the past two years identifies some income-reducing factors that weren't foreseen at the beginning of the year.

"Agriculture and Agri-Food Canada's Medium Term Outlook indicates that many of the forces affecting farm incomes in Canada in 2010 and 2011 may continue over the next 10 years. These include increasing worldwide demand for feed grains, a rising price of crude oil, a Canadian dollar near par with the American dollar, and Canadian population growth of 1.2 per cent per year, with its implications for increased domestic food demand."

In addition to the analysis on how various commodities, input costs and output performed in 2010 and 2011, the federal report offered data on 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."

It's no secret that it's easier to trim farm programs when farmers appear to be doing better than the average Canadian household, which Statistics Canada reports earns about $75,000 annually.

The last time the federal government -- it was the other guys in 1995 -- undertook massive spending cuts in agriculture, the Crow Benefit was wiped off the books.

Prairie landowners were compensated, but the payout was a piddly 20 per cent of what the annual Crow Benefit subsidy was worth to the western Canadian economy.

The Liberals argued its elimination was justifiable because it was considered a dirty subsidy in international trade agreements and because it interfered with value-added processing on the Prairies.

But the mood at the time was bullish and there was barely a whimper from farmers until a few months later, when they delivered their first load of grain and saw just how much their freight bills had jumped.

Another reason farmers might be a mite uncomfortable is found in the latest data outlining what proportion of farm family incomes actually comes from the farm business, versus off-farm employment and subsidies.

"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 farms, for example, earned only three per cent of their total family income from farm operations. For grain and oilseed farmers, it's 23 per cent.

As a sector, Canadian agriculture earned 54 per cent of its net operating income from program payments during the five-year period ending in 2009. It was 50 per cent for grains and oilseeds, 168 per cent for hogs, 147 per cent for cattle, 59 per cent for potatoes, 13 per cent for dairy and 11 per cent for poultry.

To be fair, farmers contribute to support programs on a cost-shared basis, so they were getting some of their own money back. But while Canadians are routinely told their food costs them a mere 11.8 per cent of their income, that's not including their tax dollars at work.

Some complain supply management for dairy and poultry is costing consumers dearly at the grocery store. But when compared to what it costs to support the export-oriented commodity sectors, perhaps that isn't such a bad deal.

We'll have to wait and see. But the stage is set for a budget that gives farmers something to talk about -- besides the Canadian Wheat Board.

Laura Rance is editor of the Manitoba Co-operator. She can be reached at 792-4382 or by email at laura@fbcpublishing.com

Republished from the Winnipeg Free Press print edition March 3, 2012 B8

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