From agriweek online I recomend you buy a subsciption and read it every week
If you don't like cut and pastes sorry.
BACKGROUNDER / Morris W. Dorosh, Publisher
It is not the point whether it is good or bad or whether things are as they should be. It is to the point that trends in farm consolidation are facts of life, resulting from forces that cannot be stopped, and which for all anyone knows are still intensifying.
I refer to a report recently released by the Institute for Agri-Food Policy Innovation. It concluded from an analysis of figures in Statistics Canada's farm financial surveys for 1999 and 2004 that only about a third of all farms in Canada can provide, or have any hope of providing, competitive family incomes for their operators. (E-mail users click here).
Over half (52% in 2004) of Canadian farms have annual sales of less than $100,000. Another 21% generate between $100,000 and $250,000. Fewer than 4% of farms have gross revenue of over $1 million a year, a total of about 5,100 operations. Some of these are not farms in the usual sense. Farms with gross revenue of under $100,000 number almost 84,000, according to a Statistics Canada definition which eliminates farms with annual sales of under $10,000. There are only 37,000 farms in Canada with sales over $250,000. According to 2004 information there were 3,520 such units in Manitoba, 5,915 in Saskatchewan, 6,960 in Alberta and 9,865 in Ontario. Though the total number of Canadian farms declined by 15% between 1999 and 2004, the number with sales above $250,000 increased by 18%.
The number of what the report considers to be 'large' farms will increase considerably during 2007 and 2008 as crop prices and revenues rise and there are incentives to maximize crop production. That will bring many, but by no means all, farms closer to financial viability. Farms that are primarily livestock-based may increase or maintain gross revenues over the next few years but will experience little or no profitability improvement because of higher grain costs.
In 2004, when farms with gross sales of over $250,000 made up 27% of all farms, they produced 75% of gross farm receipts and 84% of net cash income. The remaining 73% of farms generated a quarter of farm cash and 16% of profits. These are not necessarily unusual ratios. The 10% of the Canadian population who reported income of over $64,500 in 2003 paid over half the personal income tax. Half of tax filers in recent years had personal incomes of $23,000 or less.
Across the entire Canadian population, average annual pre-tax income of families in which both spouses are employed, a typical situation for a farm family, is about $63,000. For a farm with, say, $150,000 in gross revenue from farm sources to generate this kind of return would require a gross margin of 43%; for each dollar of revenue only 56 cents could be spent on expenses. For a farm with gross sales of $100,000 it would be 36 cents. Raise that to $1 million in gross revenue and a family income in the $65,000 range can be earned with a gross margin of less than 7%. Obviously the smaller the farm the less profitable, and even at the IAFPI's $250,000 gross revenue threshold an above-average family income can rarely be taken out of the farm business.
Government farm payments generally mirror farm income. The larger farms get the biggest payments. Program payments to small farms do not and obviously never will make up the shortfall in their earnings.
The Senate agriculture committee recently looked into rural poverty, arriving at predictable conclusions but few sensible recommendations. In fact off-farm income sustains many small farms and keeps their operators above the poverty line. For farms with annual sales of less than about $150,000 income from off-farm employment or other sources often accounts for all net family income, and may also subsidize farm losses.
In a free country every citizen should have the unrestricted right to live wherever he or she pleases and to do for a living whatever he or she wishes. However it is not possible, as the Trudeauistes and communists once dreamt, for the economic returns from every lifestyle to be comparable. There is farm policy and then there is social policy. Proper farm policy would primarily assist viable farms, even if it means public expenditure on behalf of people who are already reasonably well off. Income-support policy should not be specific for any given population, be it farmers, carpenters, brain surgeons or fishermen (oops, fishers).
This is not a widely accepted or understood concept. The first criticism that is made of farm programs is that they do not concentrate benefits to those most in need, in other words the lowest-income segment. It's time to grow up.
If you don't like cut and pastes sorry.
BACKGROUNDER / Morris W. Dorosh, Publisher
It is not the point whether it is good or bad or whether things are as they should be. It is to the point that trends in farm consolidation are facts of life, resulting from forces that cannot be stopped, and which for all anyone knows are still intensifying.
I refer to a report recently released by the Institute for Agri-Food Policy Innovation. It concluded from an analysis of figures in Statistics Canada's farm financial surveys for 1999 and 2004 that only about a third of all farms in Canada can provide, or have any hope of providing, competitive family incomes for their operators. (E-mail users click here).
Over half (52% in 2004) of Canadian farms have annual sales of less than $100,000. Another 21% generate between $100,000 and $250,000. Fewer than 4% of farms have gross revenue of over $1 million a year, a total of about 5,100 operations. Some of these are not farms in the usual sense. Farms with gross revenue of under $100,000 number almost 84,000, according to a Statistics Canada definition which eliminates farms with annual sales of under $10,000. There are only 37,000 farms in Canada with sales over $250,000. According to 2004 information there were 3,520 such units in Manitoba, 5,915 in Saskatchewan, 6,960 in Alberta and 9,865 in Ontario. Though the total number of Canadian farms declined by 15% between 1999 and 2004, the number with sales above $250,000 increased by 18%.
The number of what the report considers to be 'large' farms will increase considerably during 2007 and 2008 as crop prices and revenues rise and there are incentives to maximize crop production. That will bring many, but by no means all, farms closer to financial viability. Farms that are primarily livestock-based may increase or maintain gross revenues over the next few years but will experience little or no profitability improvement because of higher grain costs.
In 2004, when farms with gross sales of over $250,000 made up 27% of all farms, they produced 75% of gross farm receipts and 84% of net cash income. The remaining 73% of farms generated a quarter of farm cash and 16% of profits. These are not necessarily unusual ratios. The 10% of the Canadian population who reported income of over $64,500 in 2003 paid over half the personal income tax. Half of tax filers in recent years had personal incomes of $23,000 or less.
Across the entire Canadian population, average annual pre-tax income of families in which both spouses are employed, a typical situation for a farm family, is about $63,000. For a farm with, say, $150,000 in gross revenue from farm sources to generate this kind of return would require a gross margin of 43%; for each dollar of revenue only 56 cents could be spent on expenses. For a farm with gross sales of $100,000 it would be 36 cents. Raise that to $1 million in gross revenue and a family income in the $65,000 range can be earned with a gross margin of less than 7%. Obviously the smaller the farm the less profitable, and even at the IAFPI's $250,000 gross revenue threshold an above-average family income can rarely be taken out of the farm business.
Government farm payments generally mirror farm income. The larger farms get the biggest payments. Program payments to small farms do not and obviously never will make up the shortfall in their earnings.
The Senate agriculture committee recently looked into rural poverty, arriving at predictable conclusions but few sensible recommendations. In fact off-farm income sustains many small farms and keeps their operators above the poverty line. For farms with annual sales of less than about $150,000 income from off-farm employment or other sources often accounts for all net family income, and may also subsidize farm losses.
In a free country every citizen should have the unrestricted right to live wherever he or she pleases and to do for a living whatever he or she wishes. However it is not possible, as the Trudeauistes and communists once dreamt, for the economic returns from every lifestyle to be comparable. There is farm policy and then there is social policy. Proper farm policy would primarily assist viable farms, even if it means public expenditure on behalf of people who are already reasonably well off. Income-support policy should not be specific for any given population, be it farmers, carpenters, brain surgeons or fishermen (oops, fishers).
This is not a widely accepted or understood concept. The first criticism that is made of farm programs is that they do not concentrate benefits to those most in need, in other words the lowest-income segment. It's time to grow up.
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