The Last Friday Crop Report on a Thursday.

[fjlip]

Yes all is good till a major breakdown, engine, tranny, axles, JD combine fan and the profit disappears.
Tandem cost us 10G's, mostly labor, wiring/ ECM issues. Tech says TOO old for NEW electronics. Now self diagnosing!

[chuckChuck]

"Nearly one-third of projected U.S. net farm income this year will come from government aid and taxpayer-subsidized commodity insurance payments, according to a forecast issued Wednesday by the U.S. Department of Agriculture."

Posted on July 3, 2018 by Darrin Qualman
$100 billion and rising: Canadian farm debt

Canadian farm debt has risen past the $100 billion mark. According to recently released Statistics Canada data, farm debt in 2017 was $102.3 billion—nearly double the level in 2000. (All figures and comparisons adjusted for inflation.)

Some analysts and government officials characterize the period since 2007 as “better times” for farmers. But during that period (2007-2017, inclusive) total farm debt increased by $37 billion—rising by more than $3 billion per year.

Here’s how Canadian agriculture has functioned during the first 18 years of the twenty-first century (2000 to 2017, inclusive):

1. Overall, farmers earned, on average, $47 billion per year in gross revenues from the markets (these are gross receipts from selling crops, livestock, vegetables, honey, maple syrup, and other products).

2. After paying expenses, on average, farmers were left with $1.6 billion per year in realized net farm income from the markets (excluding farm-support program payments). If that amount was divided equally among Canada’s 193,492 farms, each would get about $8,300.

3. To help make ends meet, Canadian taxpayers transferred to farmers $3.1 billion per year via farm-support-program payments.

4. On top of this, farmers borrowed $2.7 billion per year in additional debt.

5. Farm family members worked at off-farm jobs to earn most of the household income needed to support their families (for data see here and here).

The numbers above give rise to several observations:

A. The amount of money that farmers pay each year in interest to banks and other lenders ($3 billion, on average) is approximately equal to the amount that Canadian citizens each year pay to farmers ($3.1 billion). Thus, one could say that, in effect, taxpayers are paying farmers’ interest bills. Governments are facilitating the transfer of tax dollars from Canadian families to farmers and on to banks and their shareholders.

B. Canadian farmers probably could not service their $100 billion dollar debt without government/taxpayer funding.

C. To take a different perspective: each year farmers take on additional debt ($2.7 billion, on average) approximately equal to the amount they are required to pay in interest to banks ($3 billion on average). One could say that for two decades banks have been loaning farmers the money needed to pay the interest on farmers’ tens-of-billions of dollars in farm debt.

Over and above the difficulty in paying the interest, is the difficulty in repaying the principle. Farm debt now—$102 billion—is equal to approximately 64 years of farmers’ realized net farm income from the markets. To repay the current debt, Canadian farm families would have to hand over to banks and other lenders every dime of net farm income from the markets from now until 2082.

The Canadian farm sector has many strengths. By many measures, the sector is extremely successful and productive. Over the past generation, farmers have managed to nearly double the value of their output and triple the value of agri-food exports. Output per year, per farmer, and per acre are all up dramatically. And Canadian farmers lead the world in adopting high-tech production systems. The problem is not that our farms are backward, inefficient, or unproductive. Rather, the problems detailed above are the result of voracious wealth extraction by the dominant agribusiness transnationals and banks. (To examine the extent of that wealth extraction, see my blog post here).

Although our farm sector has many strengths and is setting production records, the sector remains in a crisis that began in the mid-1980s. And what began as a farm income crisis has metastasized into a farm debt crisis. Further, the sector also faces a generational crisis (the number of farmers under the age of 35 has been cut by half since 2001) and a looming climate crisis. Policy makers must work with farmers to rapidly restructure and transform Canadian agriculture. A failure to do so will mean further costs to taxpayers, the destruction of the family farm, and irreparable damage to Canada’s food-production system.

[SASKFARMER]

Yea chuck I read the article also.

We have had the last 10 years more young people coming back to the farm than ever before. So that 2001 was correct then but today it is wrong.

Second debt has risen but I bought a combine for what 47000 in 1981 and today its 521 cash. The land was expensive in 1981 then crashed from 187000 high to 57000.

A house as an example for an RTM in 1981 was 80 to 120 grand. Now 300 up.

The price I got for wheat in 1981 was similar to today.

Canola was less than today's price.

Barley and oats were similar.

You are correct on one thing Farming is turning into a world-class shit show for the growers.

[farmaholic]

Yup....and yet people will question your statement...you are stopping progress....

Just another cookie that a mandatory tax won't fix....

As long as those responsible can admit their participation in phucking things up....and take their beating....

Example....Devin Dreeshen worked in Ritzs office while they gutted farm programs and he is now asking the liberal government fix them. ...if he would just admit he had a hand in creating the mess...

Jesus, you gotta love this guy.

[Marusko]

So considering Chuck's article is dated July 3, 2018 so is old news already, not including round 2 (or 4?) of Harvest from Hell 2019 for much of the prairies, some of the statements are rather surprising to me.

Not surprised farm debt has nearly doubled since 2000, with lots of big number land deals and I'm sure quota buyouts etc in other sectors are not cheap.

Average farm net income (exlcuding support program payments) is $8,300 per farmer??? Are there that many farms not viable? Or are there that many hobby farms in the country to bring down the average? Definition of a farm comes into play. Or maybe there's a lot of creative accounting.

3.1 billion per year via farm support program payments compared to 47 billion in gross revenue - another way to put it is, farm incomes were supplemented by an additional 6.3% in support. What!! where's my 6.3%? I get 1% thru agri-invest, and that's it. Are they including government-subsidized insurance?? Does Agristability pay that much out? Who's getting the balance of the support when grain farmers get 1%?

64 years to pay off debt??? Well we know that debt is perpetual but still, holy cow, I'm lucky to get 30 year loans from a lender, how is it that there is so much debt approved that net income would take 64 years to pay off, as an industry? Are there lenders that don't even bother looking at cashflow?

[farmaholic]

I can't even claim the SCIC crop insurance "premium subsidy"....because I am not enrolled.
Deisel excise(road tax?) Most of our deisel is burned in the field.
Gas excise tax.....no longer deducted...we pay it.

[woodland]

Still got the SP forage harvesters going here.
Ground finally froze and the creeks quit running the other day. They seem to be liking it and cleaning it up ok too. Nice to go “feed” 1,600 head in two hours by taking out some minerals and checking water on days without a fence move. All the pairs are vaccinated and ivomec’d and next week when it warms up (hopefully) the long yearlings and bred heifers will get done as well.

Just busy fixing equipment in the shop and moving bales while aiming to get a more “balanced” schedule after running like mad since calving started back in April. Trying to enjoy some well deserved family time as well .......... especially with the newest family member who’s getting baptized this weekend.

Hoping for a nice mild winter here after the exceptionally crummy weather all summer and fall. 🍀

[sumdumguy]

You are one busy guy Woodland. You ever take a vacation?

[woodland]

You are one busy guy Woodland. You ever take a vacation?

My wife and I took two days off last week while we were delivering our baby girl in Edmonton. Before that was a weekend in August when we hosted my wife’s family reunion here. Pulled the kids out of school for three days to run away to Jasper and Miette back in June which was really nice.

Right now it feels like we finally “caught up” since 2016. It’s the earliest we finished harvest and drying since then and even got some field work done this fall. Having my Dad’s cousin here for the last year has been great. Anybody who’ll bale hay with you till 4 am ahead of the next rain storm and then come back in the rain the next day to help move and wrap bales is priceless to me.

The goal of the corn was to allow more “free time” not to save money. If I break even compared to making and feeding hay or silage it’ll be a success in my eyes.