Canadian 06 Farm Income Drops.

[joedales]

Canadian '06 Farm Income Drops, '07 to Follow Downturn - 2/6/2007



OMAHA (DTN) -- Record high crop receipts couldn't prevent a drop in 2006
Canadian farm income, according to a new Ag Canada forecast.
Net cash income (NCI) in Canada is forecast to decrease by 4 percent in
2006, largely due to an increase in operating expenses, which are forecast
to rise by an identical 4 percent.
"An expected 10 percent increase in crop receipts and steady revenue in
the livestock sector will not offset the combined effect of rising input costs
and lower program payments," says Ag Canada.
Farm income in Ontario, Quebec and Manitoba is expected to be dragged down
as a result of a significant decline in receipts in the hog industry. Saskatchewan
and Alberta are expected to register increases in 2006 farm income as a result
of higher crop receipts which can be attributed to better prices and higher
marketings.
Higher prices for animal feed, machinery and fuel continue to have a negative
effect on farm income nationwide, the forecast said. Nationwide realized
net income (RNI), which takes depreciation into account, is expected to decrease
by 13 percent in 2006.
Total net income (TNI) -- which adjusts for changes in farm inventories
-- is expected down 61 percent during, as strong marketings of crops and livestock
significantly draw down inventories.
In 2007, Net Cash Income is forecast to decrease by 2 percent at the Canada
level, as continued growth in operating expenses combined with lower program
payments once again are expected to offset increasing receipts in the crops
sector.
Realized net income (RNI), which takes depreciation into account, is expected
to decrease by 13 percent in 2007.
Crop receipts are expected to increase a further 14 percent in 2007, also
setting a new record, due to continued improvement in the prices for all the
major crops in Canada. A continued strong demand for feed grains from the
livestock and biofuel sectors is expected to provide strength in grain and
oilseed prices for 2007.
Livestock receipts are expected to decrease slightly in 2007, driven lower
by declining receipts in the cattle, calf and hog industries. Cattle receipts
are forecast to decrease by 4.5 percent. Farm cash receipts for hogs in Canada
are forecast to fall a further 3 percent in 2007.
Program payments in 2007 are forecast at $3.7 billion, down 17 percent
from 2006 and 15 percent lower than the 2001-2005 average.

[cowman]

hmmmm....less than 10% of disposable income after taxes? I rest my case.
How smart is it to produce more so you can lower the price? Does Ford make more pickups when nobody wants the ones they have?
I believe this over supply of food can be reduced through the bio fuel program? Simple supply and demand? We should all be lobbying our government to up the legislated blend of both ethanol and bio deisel!
Of course this will hurt the Canadian consumer...why he might have to spend 12% of his money on food!

[furrowtickler]

This did not surprise me at all.
One thing to keep in mind, if crop prices stay where they are and Sask, Alta have average crops, input prices will devour any income increase for '07.
We also will be faced with bertha's, sawfly and wheat midge. Although I am still optimistic that we should be able to make profits in '07, times will not be as rosey as some may think. 2008 should be the year we start to roll, jmo.

[Burbert]

I think that the grain companies feel they can pay us 1 penny per bushel, because they know that CAIS is supposed to pick up the difference, on losses that we suffer. Go figure...

[sask]

Are you the most negative farmer around? Why farm if
you are nothing but gloom and doom - go to town
and get a job.

[farmers_son]

I noted the comment “We are blessed with a safe, abundant and affordable domestic food supply here in the United States, thanks to the farmers and ranchers who produce it."

Actually it is thanks to farmers and ranchers from all over the world. The United States is the world's largest food importer.

“…we are proud of the role U.S. farmer's play in making our food supply more affordable for all," she said. No reason to be too proud as the farmer has less and less to with the actual retail price of food.

The CIA, when it is not starting wars in third world countries, compiles data suggesting the GDP per capita is $43,500 per year or $119 per day. According to the article, 36 days or $4284 is spent on food. That is $357 per month or $12 per day. No wonder the average American only eats 8 ounces of any kind of meat per day and that consumption of beef has dropped 14% since 1980. Per capita beef consumption is 3 ounces per day.

It would seem to me that the reason the average American only spends $12 per day on food is that is all they can afford. Since 1975 most of the gains in U.S. personal incomes have gone to the top 20% of wage earners. For the rest of the population their income levels have remained relatively constant. According to the CIA, 12% of Americans live below the poverty line.

[melvill]

Easy does it, sask. I agree that there is often not enough positive thinking in primary agriculture. However, many people who struggle year after year find it hard to stay upbeat when their city cousins look to have a much easier time of it.

On the other hand, I'm reminded of my wife's departed uncle, who had a large and successful farm. He made a habit of never going to the local coffee shop - Esso University, he called it - because he claimed that, when he did go, he always came away depressed by the gloom and doom.

I sometimes find the gloom and doom here hard to take but I also know that letting off steam is very emotionally healthy for people. It's better than getting into a fight at beer-league hockey games or throwing a beaner right through the back of the house at a local curling rink. Letting off verbal steam helps them release frustrations so they can be more productive at their businesses. I'll get off my soap box now.

[cowman]

Now I'm not sure about you farmers son, but I doubt I eat 8 ounces of meat a day? I think the Canada food guide only recommends about 3 ounces a day? An eight ounce steak is too big for me.
How much does 3 ounces of hamburger cost? Local flyer has hamburger at $1.89/lb.? Not being argumentive here...just putting it out there?
Is $12 a day too much to spend on food...well maybe it is if you don't have any money? Is $25,000 too much to spend on a car...again probably if you don't have any money? Is $1000/month too much to spend on an apartment...same answer.
Where does it end? When the consumer gets their food for nothing? The fact is, despite the farmer and processor becoming more efficient, there has to be a profit for them to continue?
Yes cheap food can be imported, and that seems to be the preferred way to keep costs cheap. It is not helpful for the primary producer...which I might suggest is why our rural population is getting older with very few young farmers coming up? It works in the short term but where does it end?

[melvill]

Perhaps Burbert doesn't want any one to succeed, not a farmer , not a independant fert/chem dealer, not his local car dealership and lord knows not a grain company. It's comforting to know he supports the CWB as under the continued oppression and tyranny no one does get a head. Seems he forgets what the last word in grain company is, COMPANY, and any goal of any company that I know, including my farm is to make money. Perhaps instead of harping on the matter all the time Burbert could invest in a grain company , thereby taking advantage of some of these riches in share dividends!!

[farmers_son]

I guess when commenting on an article like this you need to consider just who the target audience is. Given the American Farm Bureau Federation had this piece published on DTN it would seem safe to presume the purpose was to rally the troops back home on the farm more than to provide any real useful information.

The entire article can be viewed at:

http://www.fb.org/index.php?fuseaction=newsroom.newsfocus&year=2007& file=nr0205.html

There is nothing wrong with the AFB trying to make farmers feel proud. Why shouldn’t farmers feel proud. However the image of the American farmer feeding Americans is probably a thing of the past.

I think producers, in the United States, Canada and beyond, need to form a new image of themselves. The old image, the image the AFB seems to be supporting, of the red hip roof barn with the small silo next to it, pa in his coveralls with the red hankie in his hip pocket and ma in her apron standing beside, the faithful John Deere 720 coming over the knoll, is a thing of the past. The modern farmer works in a global market place not a domestic marketplace and the produce from that farm may end up in a fuel tank, a protein supplement for a BSE cow in the UK or a restaurant in Japan; not in an American kitchen.

While the AFB may be forgiven for taking some poetic license with the facts they are doing farmers everywhere a disservice by perpetuating a myth of the proud American farmer producing evermore food for less to fill the American dinner plate thereby sustaining fortress America. Even American farmers are going to need to start thinking in new terms. That they produce food, fuel, feed in a global marketplace and how many days the American consumer has to work to pay for their food bill is of little real consequence to them.