Despite last year’s severe drought conditions farm profitability remained strong in 2015.
Last month, Statistics Canada reported that net farm income in Alberta was $831 million, slightly higher that the 20-year average of $560 million
A timely July rain, a long, frost-free fall and “never seen before” prices helped Alberta farmers avoid disaster.
“All the weather events seemed to line up very well,” Humphrey Banack, vice-president of the Alberta Federation of Agriculture, said in an interview. “The dryness, the one timely rain, the long fall wove into a fabric of good returns for Alberta.”
In the east and northwest of the province, some crops hadn’t even germinated until that July rain. The late frost, which arrived almost a month late in the Edmonton region, allowed these crops to mature.
Last fall Agriculture Financial Services Corporation was expecting to pay out about $600 million in claims. They were anticipating 15,000 claims, with an average of $40,000 per claim.
Instead they received 12,000, with an average of $24,000, adding up to $267 million in drought-related insurance claims.
Crop producers also benefited from high prices – $13 per bushel for peas, $450 to $550 for canola – and a weak Canadian dollar, said Banack.
Mother Nature also lent a helping hand to cattle producers in the form of a mild winter.
The drought left many farmers looking tight on pasture and feed. While last year’s July rain helped rejuvenate the pastures, allowing for an unusual late forage, the warmer winter temperatures allowed producers to stretch their feed out longer.
It also helped the price go down and restored profitability to the beef sector, said Banack.
There was fear that the high forage costs (some farmers paid $200 for hay bales on Kijiji) would further reduce an already low cattle herd.
But record high livestock prices encouraged farmers to hold on to their breeding stock and avoided a liquidation similar to the one in 2002.
“We didn’t see a sell-off, but the drought probably did hamper our expansion a little bit,” said Brian Perillat, of the Alberta Beef Producers. “Producers maybe would have tried to breed a few more heifers to get more cows, but due to the drought that may not have happened.”
The beef herd is the smallest it’s been since the early 2000s – still recovering from last two droughts, in 2002 and 2009, and the BSE scare of 2003. The industry was hoping for a rejuvenation of sorts, said Perillat.
While record-high livestock prices provided the farming industry with its biggest boost last year, current data indicates that won’t last, said Perillat. Prices have dropped from the 2015 peaks, as the Canadian dollar began its slow recovery.
