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Winnipeg Free Press - PRINT EDITION

Farm income forecast to drop across nation

Decline of 91 per cent seen after record stats last year

By: Jennifer Graham

Posted: 05/17/2010 1:00 AM | Comments: 0 (including replies)

KEN GIGLIOTTI / WINNIPEG FREE PRESS Enlarge Image

Net operating incomes for Manitoba hog producers are expected to fall short of historical averages this year but all farmers are taking a hit, agriculture experts say.

REGINA -- By his own description, Norm Nordgulen is "just a poor cowboy" trying to adapt and survive on the farm.

The Saskatchewan man says he's made a lot of changes to save money. Nordgulen grows his own hay because it's a cheaper way to feed about 125 head of cattle he has in his operation near Assiniboia. About a decade ago he switched to organic farming of lentils, peas, wheat, durum and flax.

"One of the big reasons I'm still here is I'm organic-farming," says Nordgulen. "I don't have the chemical inputs. My biggest input is fuel (to run machinery), so I save tens of thousands on chemical inputs.

"I would not have been able to survive this long without that."

Nordgulen's feeling that "everybody's got to adjust" seems fitting in light of the latest farm income forecast from Agriculture Canada.

The agency quietly released its 2010 predictions in late April, two months later than usual. It said realized net income for farmers across Canada is expected to total $291.5 million -- a 91 per cent drop from 2009.

"Canada's farm sector was not immune to the global economic downturn. In fact, global economic conditions have a far-reaching effect on farm income," the forecast reads.

"The global recession has left producers facing lower consumer demand for their products -- red meats in particular."

The agency says the livestock sectors will continue to struggle.

Cattle farms are expected to lose an average of $5,195 in 2010 -- a drop largely blamed on country-of-origin labelling regulations for meat products in the United States and a strong Canadian dollar.

In Manitoba, Quebec and Ontario, net operating incomes for hog producers are expected to be below historical averages this year, mainly because increases in expenses are outpacing higher receipts and program payments.

And, after record income years in 2008 and 2009, the net income of the average grain and oilseed farm is expected to drop, "having an impact on the overall farm-income outlook."

Some provinces will feel the hit more than others.

Agriculture Canada forecasts realized net income for farmers in Alberta will be negative $516.3 million this year -- a 254 per cent drop from $334.9 million in profit in 2009. In Saskatchewan, the realized net farm income is expected to total $980 million -- a 55 per cent drop from the $2.2 billion forecast in 2009.

While numbers are expected to be down across the country, it's still fixing to be a better-than-average year. The forecast drop for 2010 appears worse because 2008 and 2009 were record income years.

Greg Marshall, president of the Agricultural Producers Association of Saskatchewan, says the forecast is disappointing.

"Nobody likes to be staring a decrease in income in the face, but actually it's no real surprise," says Marshall. "I guess we all kind of expected that this was coming with the increase in input costs and lower commodity prices and the lack of support from existing safety net programs."

Marshall says he was astounded at Agriculture Canada's predictions.

"We're providing sustenance to people, producing food, and when you see a 91 per cent drop right across the nation, that's scary."

The Canadian Cattlemen's Association says the recession caused a big drop in demand for high-value cuts of beef in North America and the rising dollar also hurt producers. Association president Travis Toews said producers have faced several difficult years. He noted some have left the industry and others are working to keep costs down. But Toews is trying to look on the bright side.

"Given the tightness of cattle supplies in North America, there is some agreement that when we do begin to emerge from this recession that we're going to see a real improvement in pricing," he said.

"So I am cautiously optimistic that we're going to round this corner at some point. I think we're seeing some signs in the market today that could point to the fact that it may not be that long in coming."

Nordgulen says he's taken "a good hit" in the past, but he also expects prices to increase this year.

The farmer says he'll ride it out and keep working the same piece of land that has been in his family since 1907.

"What else is there to do? This is what I like doing."

-- The Canadian Press

Republished from the Winnipeg Free Press print edition May 17, 2010 B6

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