Farm net income numbers concerning

In a year when summer weather forecasts at least hint at too hot and too dry a condition for crops and China has plunged the agriculture sector into a time of trade uncertainty, more bad news is hardly what producers want to hear.

But more bad news is what they have gotten.

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Recent numbers released by Statistics Canada show net incomes on Canadian farms in 2018.

A decline is never positive news but it gets downright depressing and more than a little concerning when you read further and see the decline was 45 percent, which is the largest annual percentage decrease since 2006, according to Statistics Canada.

Realized net farm income — which is defined as the difference between farm cash receipts and operating expenses, minus depreciation plus income in kind — dropped 45.1 percent in 2018 to $3.9 billion, Statistics Canada numbers detailed in a recent Western Producer story.

The 2018 decline follows a 2.8 percent decrease in 2017.

Among the suggested reasons for the dramatic decline were rising feed, interest and labour costs together with little change in farm cash receipts.

The reasons are suggestive as to the root of the problem agriculture has long held, little control of the prices they receive for their commodities, giving them little ability to look to their market to offset rising prices on the other side of their ledger.

In most businesses there is at least some ability to pass off increasing business costs to their consumers. If it costs more to buy the ingredients for lasagna or a bacon, lettuce and tomato sandwich a restaurant can inch the cost up to the consumer to cover the cost.

Farmers can’t turn to a canola oil crusher or oat processor and ask for more for their product, as farmers are price takers, not price setters.

Of course the question is now where net incomes from farmers may go in the next 12 months.

Even if the numbers are more theory than reality, as can be the case in terms of real dollars in the bank, a decline in 2019 is obvious.

Things currently are far from ideal in terms of prospects ahead already.

There is an almost universal need for moisture across the Canadian Prairies, and we are barely into June. Timely moisture will be critical moving forward.

The China situation, and the reactions of the already wild card American president Donald Trump simply muddy the waters in terms of trying to predict what might happen tomorrow, let alone by the time harvest 2019 is complete.

The Stats Canada numbers simply suggest farmers need a few things to fall their way soon or the situation could turn dire.

Calvin Daniels is Editor with Yorkton This Week.

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