• You will need to login or register before you can post a message. If you already have an Agriville account login by clicking the login icon on the top right corner of the page. If you are a new user you will need to Register.

Announcement

Collapse
No announcement yet.

Speaking of farm support programs....

Collapse
X
Collapse
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Speaking of farm support programs....

    Saw this in the Wpg Free Press today. I don't think it's going to affect us cattle producers much, what with our margins having disappeared years ago.

    I wonder what the grain guys will think about it?

    http://www.winnipegfreepress.com/business/some-farm-support-programs-hard-to-justify-170807576.html

    Some farm-support programs hard to justify

    By: Laura Rance

    In Canada, there's a long history of insurance programs in which federal and provincial governments help farmers weather the often-sharp ups and downs of their income. But since farmers also pay the premiums to participate, they justifiably feel entitled to some say in how those programs are structured. That's partly why farm leaders were perturbed when they read the fine print of the newly minted federal-provincial agreement on a suite of programs called "Growing Forward" for the next five years.

    The other part is the changes themselves. The farm community had been prepared for some change, although the "consultation" process consisted largely of briefing sessions on how things are going to unfold.

    But farm leaders and even some provincial ministers claim they didn't get the full story until after the deal presented at the recent federal-provincial ministers' confab in Whitehorse was done. From the perspective of farmers paying into these programs, they are getting a raw deal.

    AgriStability, the main support program, hasn't just been modified -- some would argue it has been gutted. Until now, farmers have had a program that lets them insure against sudden drops in revenue relative to their farm's past performance. Under the new rules, their program payments will be based on a reduced portion of whichever is lower, their reference margin or their eligible sales.

    Without going into all of the convoluted details, it means farmers will be eligible for significantly less support if they need to draw on the program.

    While some suggest these programs now provide too little value to be much good, others quietly concede there was a significant moral hazard in the way the programs were designed.

    Surging commodity prices in recent years have allowed farmers who harvested decent crops to build a healthy reference margin under AgriStability. A downturn in revenue, either through lower prices or reduced production, could have made farmers eligible for payments even though they were still in a profitable position.

    Another dilemma for government is new thinking on how farmers' incomes stack up to the rest of Canadians.

    An analysis prepared for the Canadian Agricultural Policy Institute (CAPI) in 2009-2010 points out the oft-reported net farm income, which has been flat or declining, is a poor measure of actual farm-family wealth.

    Farmers, like the rest of us, earn income from diverse sources, and because of the capital-intensive nature of farming, farmers have traditionally been asset rich and income poor. But they do accumulate significant wealth through asset appreciation.

    For example, despite stable net farm operating income between 1996 and 2007, the total value of farmers' land and buildings rose 31 per cent for grain and oilseed farmers, and 46 per cent for dairy farmers.

    Farmers' average net worth is about triple that of the average Canadian family. And because commodity prices have been strong, they've recently enjoyed family incomes that are well above the Canadian average.

    On that basis alone, farm supports become harder to justify, especially farm supports that prop up existing ways of doing business in a rapidly changing environment.

    Studies show farm supports are quickly capitalized into land -- accounting for up to 50 per cent of values. With governments acting as a revenue backstop, farmers have been aggressively expanding their operations. That's causing land prices to soar, with some farmland in Manitoba now selling for $6,000 an acre.

    Canadian farms carry almost twice the debt of their American counterparts, and their debt is growing faster, despite the fact they are less able to carry that debt due to shorter growing seasons and fewer cropping options.

    Farmers here also have higher debt-to-earning ratios, which means they carry more risk, which in turn leaves them vulnerable in the event things take a turn. So stabilization may actually be destabilizing the sector.

    Earlier this year the federal government changed the rules to make it harder for people to over-extend themselves buying homes. It can hardly justify propping up a similar spending spree on farmland.

    When CAPI looked at federal spending on farm supports a couple of years ago, it found 59 per cent of the $8 billion in annual spending in agriculture was going into farm supports, 11 per cent on marketing and promotion and only seven per cent into research and development. It strongly recommended government focus spending on research and innovation, which provides more return on investment.

    The government says that's what it's doing. If they are to protect public investment in agriculture, farm leaders need to make sure that's what it does.

    #2
    That brings up a lot of issues kato and certainly
    supplies food for thought.

    Net farm income maybe is a poor measure of actual
    farm-family wealth. By the same token are people on
    welfare or employees seeking a pay raise judged on
    their family wealth or their income?
    Asset appreciation is not something that puts food on
    a farmers table on a monthly basis and just like the
    stock market a high valuation this month doesn't
    mean it will be worth more (or as much) this time
    next year.

    "For example, despite stable net farm operating
    income between 1996 and 2007...." I think they must
    be joking here - trying looking at the statistics
    people.

    Maybe dairy farmers property values rose 46% but
    that shouldn't appear in an analysis of farm
    income/wealth to determine future support systems
    as I believe the supply managed sectors are excluded
    from the programs (they don't need them as they get
    adequate stable returns from the marketplace)

    "Farmers' average net worth is about triple that of the
    average Canadian family. And because commodity
    prices have been strong, they've recently enjoyed
    family incomes that are well above the Canadian
    average."
    So if we invest 3 times what a family does buying a
    house in our farm business why shouldn't we have a
    chance at making a higher income? Its a business and
    a business investment.

    Interesting that Canadian farms carry almost twice
    the debt of their American counterparts - I wonder
    why that should be? poorer support programs or is
    much of the debt in Canada owed by the supply
    managed sector?

    The big question for many of us is "are we happy to
    continue doing this job because we love it despite
    being asset rich and cash poor compared to non-
    farmers?" Will enough people be happy to have $1
    million invested in a business that returns $20,000
    or less a year despite working 7 days a week and
    taking few, if any holidays?
    I guess so far the answer is YES as there is an eager
    buyer for every farm that is for sale.

    As for farm support programs in Canada I say for all
    they are worth - bin them.

    Comment


      #3
      I'm with grassfarmer...bin them! Ag stability/Ag invest/ Crop insurance/farm fuel!
      Then on top of that....bin EI, WCB, CCP, and all the other BS, the townies get!
      Now I might have a bit of a problem with CCP.....since I paid into it all those years.....solution give me my money back with interest and I'm good to go!
      In fact.....don't tax me on anything......and I won't ask for anything.

      Comment

      • Reply to this Thread
      • Return to Topic List
      Working...