Farmers going broke? Not by a long-shot, says Gervais
By Tim Kalinowski
While farm incomes are expected to be down slightly this year, J.P. Gervais, chief economist for Farm Credit Canada, says 2017 should still be a fairly good year for producers.
“They should feel confident going into 2017 they are going to make a decent dollar at the end of the year,” he confirms. “If you have realistic expectations about what the market is going to be able to offer at this stage then 2017 still compares very favourably with the five year average.”
Gervais says the numbers look a little crooked on farm income coming into 2017 because we are coming off ten years of record highs, and are now moving into a different stage of the growth cycle.
“From 2005 to 2015 we had ten wonderful years. It’s been spectacular. And over the last five, especially, reaching record after record when it comes to farm receipts. I don’t think it is realistic to expect we are going to see the next ten like the previous ten. If we are able to sustain the levels we have seen the past few years, I think that’s a pretty good outlook.”
Gervais is predicting modest growth of two per cent in crop receipts over 2016, and a slight contraction of four per cent in livestock receipts. He acknowledges this slight dip may have a more noticeable impact on Alberta’s farm sector due to its greater reliance on cattle.
“When you think of Alberta, and livestock receipts down four per cent, the province is geared more toward livestock so the receipts being down by four per cent will likely have a bigger impact than it does in Saskatchewan, for example. For crops, from a receipt standpoint, things are looking okay.”
Gervais stresses producers will also have to think about finding greater efficiencies in their farm operations to offset an expected three per cent increase in farm input costs in 2017.
“Farm inputs overall are projected to climb by a rate of three per cent, so that suggests that farm net income could be down as much as ten per cent. So it will definitely be a little bit tighter in 2017 than it was in 2016 and 2015. But, historically, we are coming off a really strong deposition. So, overall, I am very pleased and confident it could be looking like a very good year by the end of the year,” he emphasizes.
Gervais expects the farm cycle to continue leveling off over the next few years to make for a so-called “soft landing.”
“That’s not a bad thing because we are talking about leveling out at really high level,” says Gervais. “We are very much in line with the last five years in terms of the average. So something that still shows a lot of promise, and a promising outlook for Canadian agriculture.”