Farm net income gets a boost

Sunday, May 25, 2008

by BETTER FARMING STAFF

In 2007, farmers’ net income rose to $1.675 billion from $771 million in 2006, StatsCan reported Monday.

The rebound came after two years of sharp declines in income related to the BSE crisis and persistently low grain prices. The gain was also realized in spite of dramatic income declines being reported in most eastern provinces and British Columbia. Quebec and the Prairie provinces were the two areas reporting gains.

In Ontario, 2007 realized net income dropped to $93 million from $102 million in 2006. CLARIFICATION: Once the value of inventory changes is added into the equation, net income plummets to -$180 million in 2007 compared to -$34 million in 2006.

The report attributes significantly higher grain and oilseed prices as the reason behind the income boost, noting that 2007 crop receipts jumped nearly 25 per cent compared to 2006 levels. Livestock levels boasted a more modest increase of just over two percent, led by revenue increases in the dairy and poultry sectors. Overall, the dairy, poultry and eggs supply-managed commodities jumped 8.5 per cent in revenue. It’s the largest increase for these commodities in more than 20 years the report said.

Input costs have also increased 8.2 per cent in 2007 compared to the previous year, with the rise being attributed to soaring feed and fertilizer costs. These rose more than 20 per cent over one year, an increase of a magnitude that has not been seen since the late 1970s, the report said.

In Canada, farm operating expenses were $34.2 billion, 14 per cent above the previous five-year average. In Ontario alone, costs rose to $8.1 billion from $7.7 billion in 2006, an increase of more than five per cent.

Rising interest expenses, labour costs and machinery fuel expenses connected to hikes in gas and diesel fuels were other factors in the rise of operating expenses.

For the second year in a row the value of inventories fell, and was reported to be $1.3 billion in 2007. The report attributed the drop to producers drawing on stocks to capitalize on stronger grain prices, drops in both yields and crop production in the Prairies; and a drop in livestock numbers related to a growing trend in shipping animals to the U.S. for finishing because of lower feed costs there.

And while the total value of agricultural production grew more than five per cent last year, at $9.2 billion in 2007, the industry’s net value remained nearly six per cent below its average for 2001 to 2006. BF