Denial, denial, denial

[jensend]

free markets are one thing; the type of capitalism in north america now is another. confusing the two leads to invalid assumptions and conclusions. maybe the type of capitalism in the usa now is why it is weakening.

[charliep]

Perhaps you could post the NFU study for everyone to
look at. Would interested in their results.

Found the following. Is this what you are referring?

[URL="http://www.nfu.ca/"]nfu[/URL]

[oneoff]

Thankyou charliep. I admit I didn't do my research as I ran across that "750 billion and no return except government subsidies" in the Western Producer front page story a couple of weeks ago.
Here is what I,ve found so far:



Statistics Canada data shows that despite farm production totalling $722 billion in value over the
past 25 years (nearly three-quarters of a trillion dollars), Canadian farmers’ net income from the
markets (with farm support payments subtracted out) has totalled less than zero. Due to a
grinding farm income crisis, over the past 25 years, 100% of farm families’ net income has come
from farm support programs, off-farm jobs, and loans.


Here is a bit more of where it came from and the authors analysis: quote

"How a Corporate Farmland Buy-up,
Rising Farm Debt,
and Agribusiness Financing of Inputs
Threaten Family Farms and Food Sovereignty
(or, “Serfdom 2.0”)
A report by Canada’s National Farmers Union
June 7, 2010
Outline of a problem
The land on which our food is grown is, to a significant extent, owned by local citizens and
the families who work that land. This family farm model is widely supported—by farmers
and non-farmers alike. But this model is under serious threat of extinction. And the issue
goes beyond mere land ownership: the core issue is one of autonomy and control—ensuring
that the men and women who produce our food have stable, resilient bases from which to
make good, long-term decisions for their farms and for our food systems. This stability and
long-term thinking can lead to superior environmental outcomes, more prosperous
communities, and the inter-generational transfer crucial to our family-farm model. In
working to ensure autonomy and control, the aim is not farmer “independence,” but rather
healthy interdependence—the farmer as an integral part of his or her family, community,
region, and nation. Our farmers are stewards who need to be free to react to the needs of
their soils, animals, families, and neighbours as much as to the dictates of markets, bankers,
or agribusiness. If corporations or wealthy investors take control of our land and farms, our
food systems and ecosystems will be seriously damaged.
Our traditional model of farmer autonomy and control and local land ownership (and the
national food sovereignty it supports) is currently threatened on at least three fronts:
1. Non-farmer foodland buy-up, a.k.a. “land grabbing.” In countries around the
world, including Canada, investors, corporations, and foreign entities are buying up
farmland. Canadian farmers, financially weakened by an ongoing farm income crisis,
are easily outbid for land by corporations and by investors looking for safe financial
havens in uncertain economic times.
2. Farm debt. Current Canadian farm debt is massive, and rising. For each net income
dollar farmers earn, they must shoulder, on average, 23 dollars in debt. Burdensome
debt distorts the way farmers make decisions—forcing many to focus less on the soil,
Losing
Our Grip:
Page 2
the future, and nature, and more on short-term cash flow. While farmers may retain
the titles to their farms, as debt snowballs, they cede control and autonomy.
3. Input financing by agribusinesses and investors. Corporations are financing an
increasing share of farmers’ seed, chemical, and fertilizer purchases. In one version
of this arrangement, it appears that some grain companies are financing crop inputs,
and also requesting (or requiring) contracts that bind farmers to deliver their crops in
the fall to the company that supplied the inputs and financing. In another version,
investors “participate” with the farmer by providing operating capital, then taking a
portion of the crop at the end of the year.
As farmers owe more and more and own less and less, and as farmers are forced more into
the arms of corporations and investors, farmers lose control of Canada’s farms and foodland.
And as autonomy and ownership are taken from our farmer citizens, Canadians lose their grip
on their food system. This report examines exactly who is taking control of our land and our
food system, and it explores policy options to retain citizen control and food sovereignty." unquote

My opinion is that few people will have read this far because they noticed the word NFU. Pity. and petty too. Unless and until we can all learn to tolerate both sides of a debate (and especially the truth and shades thereof) we will never grow and prosper without predatory feeding off one another's mistakes and misfortunes.
Personally I can't see what is wrong with the NFU view on this subject. And no I am not an NFU member; but I can't see where they are wrong on this issue.

[charliep]

I would be extremely cautious in aggregated data. Does this
include dairy programs? How is a farm defined? Does it include
lifestyle farmers? Farmers with significant outside income and
no intention of full time farming. Perhaps increasing debt levels
is a outcome of an industry in transition as older farmers exit
and new businesses enter or existing ones expand.

No doubt farming is an extremely difficult and challenging
business as demonstrated in full life this year. I would argue
that farming has provided many families a good living and
opportunity to prosper. Many I am willing to bet participate in
this website. Not every farmer has lost money ever year in the
last 25 years. Not every farmer is going broke today.

[charliep]

For what it is worth, StatsCan is presenting to ARD this week on farm
financial structure. Not sure if the same study. Can include some of the
key points in a posting later in the week.

[FarmRanger]

I used to read NFU press releases when I was younger and wanting to learn everything about farming I could. Exposing all the 1/2 truths, propaganda and flat out lies was fun at first, but it got tiresome after a while.

Charlie is right about aggregated data, a lot can be hidden in there, and conclusions drawn that don't follow the what real data says. If they still operate the same way, that's probably the case with this release too. A healthy dose of skepticism would be in order at any rate.

[LWeber]

http://www.oecd.org/document/27/0,3343,en_2649_33773_45538523_1_1_1_37401,00.html

OECD report.

[checking]

Unless you are only interested in your own personal situation; it is the aggregated data that gives the best glimpse of the overall big picture. You can not extrapolate individual circumstances to detemine estimates of overall averages; but you can combines large numbers of unselected examples to get some idea of how the majority are doing.
It is a great disservice to all those doing their best; but doomed due to a variety of factors; as well as those who have failed and wisely moved on to; to say that things are pretty good. They are for me; may be for you; but neither of us are any help to the many who are struggling with current problems; let alone the future problems that will be even greater challenges for every last farmer.
Charliep I ask you to think about your valid comment about supply management subsidies possibly being included. Thats a very valid point; but when you think about it; if these subsidies are distorting the Western Canada situation; it means that not only Western farmers didn't make anything from their farming production in 25 years; they must have been well in the hole; on average.
To repeat if you are analying the economic health of farming you must look at aggregated data. To do otherwise is to distract from the big picture by dwelling on relatively easy isolated examples of extremes that don't fit anywhere near the average levels.

My guess is that farmers are in debt up to their ying yang. Some of those old debts got paid off in the past; and those assets are what makes those persons relatively financially secure. Combined with those that didn't get caught with 24% interest rates (a generation ago or those financianing with unpaid credit card balances today); those who had grain and production to sell the couple or three times it was worth a killing in the last 25 years; those who may have inherited assets and money; those whose wife provided the income at crucial times; those who though management and good luck managed to avoid the majority of major blunders and mistakes that are in the farming minefield; those who timed their expansions and changes though a combination of good luck and management decisions; and those who who worked with their neighbors and families for the overall benefit of all parties...... all these can certainly contribute to building a prosperous farming operation. But if no new people want to carry it on in the next generation..... THEN MAYBE THERE REALLY IS A PROBLEM (S).

[charliep]

Here is a website with Statcan financial data. The study referred to seems to be a pay for data one.

[URL="http://www.statcan.gc.ca/subject-sujet/result-resultat.action?pid=920&id=3953&lang=eng&type=CST& pageNum=1&more=0"]farm financial statistics[/URL]

I note the average farmer (2009) has about $1.58 mln of assets, $300,000 of debt and $1.28 of equity.

[oneoff]

Larry Webers link shows that 17% of Canadian farmer's gross receipts from 2007-2009 came as "producer support".
Unfortunately; as charliep has pointed out; this is aggregated data and should be viewed with great skepticism. Another poster hints that readers should be wary of what anyone says (I guess the NFU in particular).
Nevertheless there is such a thing as corroborating evidence. Seventeen percent of Gross farm receipts is a substancial figure. The accountants among us should be able to determine if this equates pretty closely to a conclusion that any profit in farming comes from such things as government subsidies.
Then the next step is for some crow eating.

[oneoff]

OK charliep this should be checkmate (or not). Thanks for the link to Statscan; then go to selected farm stats; by farm type; crop production. Of course; overlook that it is aggegated data.
I've posted the table as best as I can format it

Statistics Canada

www.statcan.gc.ca

Farm operators, selected financial statistics, by farm type
(Crop production) 2004 2005 2006 2007 2008
number
Crop production
Farm operators 138,830 132,440 130,480 133,380 132,540
average per operator ($)
Total income 52,040 53,009 59,690 67,700 80,500
Off-farm income1 32,248 33,922 36,818 38,544 40,505
Net operating income 19,792 19,087 22,872 29,156 39,995
Net program payments 11,177 16,420 18,160 12,280 8,309
Net market income 8,615 2,666 4,712 16,876 31,686
Adjustment for capital cost allowance (CCA)2 15,096 15,848 16,932 17,870 19,800
Net market income adjusted for CCA2 -6,481 -13,182 -12,219 -994 11,886
Total income adjusted for CCA2 36,944 37,161 42,758 49,830 60,700
Notes:
The estimates cover farm operators involved in one or more unincorporated farms (with gross operating revenues of $10,000 or more) or incorporated farms (with gross operating revenues of $25,000 or more).
1. Excluding taxable capital gains.
2. The capital cost allowance obtained from the income tax returns does not correspond to the economic depreciation. Capital cost allowance represents the expense written off by the taxfiler as allowed by tax regulations.
Sources: Statistics Canada, CANSIM, table (for fee) 002-0035 and Catalogue no. 21-206-X.
Last modified: 2010-06-28.

To me its says from 2004 to 2008 there was but one positive net market income adjusted for Capital Cost Allowance year in 2008. If you add up the red ink for the 2004 to 2007 you get three times as much as the 2008 taxation year that I fondly remember. That makes me strongly think that we should take an openminded look at the last 25 years data from Stats Canada; and just maybe the NFU will be in the ballpark with their analysis. What say you charliep.
And please watch out for that off-farm income line. It inflates the figures by about a factor of two; and makes for a sorry balance sheet for 1.5 million of assets and only 300,000 of debt. What kind of a crappy return on investment is that. Somebody put a better spin on this because it looks way worse than I thought. Watch out for half truths; pregudices and support for the industry which even I could prove to be viable at farmers expense.

[northfarmer]

I agree that aggregate data can hide things....I also beleive and know that grain production is at best a marginally profitable business that in the long run returns poorly compared to other industries, that does not mean I am going to leave the industry I am passionate about...

we are not in a true free market economy, here, or in any other G8 or G20 country.....govt are very involved in all industries whether it is policy on and royalty structures on minerals and oil, forestry on public land, auto mfg etc......so quit your whining about govt invlovement in the ag economy it happens..

....the Libretarian in me says it should not happen, but all the liberals, socialists, and even commies want more govt involvement not less.....

in Ag it is about maintaining a level of govt support through risk mgmt and otherwise in our business for survival as we export and compete with these exports with every other producing country...i do not like it but that is reality...

when and if the collective solution is determined in canada to ever be produce less as a means to increase profit I hope I have the foresight to sell out before the market for my assets crashes.......

[LWeber]

Here is a history lesson:

http://library2.usask.ca/sni/stories/agr17a.html

[newguy]

There is lots of money spent on agriculture in Canada. There is just too much of it is used up before the farmers get any. Governments of all countries will always do what they can to ensure food production in their own country. So we have to play the game. In the end it is the consumer that benifits the most,Not the farmer.

[wmoebis]

I get a kick out of them including off farm job as farm income.

If you were working for Sobey's for $15 per hr 40 hrs a week= $600 gross. You need more than they pay to live your life style and they wouldn't give more, so you got part time at Safeway for $10 per hr for 10 hrs a week=$100. Would that meen you got $700/week from your job at Sobeys and they are supporting your life style?