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Profitable year ahead for farmers

High prices will boost farm incomes to record levels this year, say new reports, but fertilizer and fuel costs could soon drag them back down.

High prices will boost farm incomes to record levels this year, say new reports, but fertilizer and fuel costs could soon drag them back down.

Cameron Short, executive director of policy analysis for Agriculture and Agri-Food Canada, tabled three reports Monday on farm income and the state of Canadian agriculture.

"Farmers will see their net incomes rise to record levels thanks to the strength in commodity markets and the decline in operating expenses," he said of the 2010 crop year. Most farms could expect to see some $50,000 in net operating income this year, he said — about 31 per cent more than the five-year average.

Net operating income is the money farms have left after expenses for debt repayment, investment or other uses, according to the reports.

Rising fuel and fertilizer costs would whittle net operating incomes to about $44,000 next year, Short said — less than this year but still well above average. Grain and oilseed demand would stay strong over the next 10 years due to demand, with cow and pig producers seeing a slight recovery.

High debt loads could also put a crimp in many farm fortunes, added Humphrey Banack, president of the Wild Rose Agricultural Producers. "We are one of the most highly indebted industries in the country," he said, and most analysts predict interest rate hikes in the near future.

Winners and losers

Farming accounted for about one out of every eight jobs last year, according to the reports, or about eight per cent of the economy. About 20 per cent of farmers were considered young, under the age of 40.

Export bans in Russia made for tight grain supplies last year, the reports say, pushing prices near to the peak levels set in 2008. Floods cost many Prairie farmers their harvests, but also reduced demand and prices for fertilizer and chemicals. Anyone who had grain to sell did very well as a result: most grain farmers earned about $62,000 in net operating income, or about 42 per cent more than usual.

Most Sturgeon County farmers had great harvests last year, said Jamie Victoor of Victoor Seed Farm Inc., but also struggled with excess moisture.

"We had so many crops sprout [after they were harvested] last fall." That, plus high grain prices, should boost the cost of seed and other inputs by about a quarter this year.

Cattle farmers laboured under a high Canadian dollar and U.S. import regulations, the reports show, earning about $12,000 per farm worth of net operating income. They would make even less next year, with earnings falling to about $6,000 per farm.

Most farmers still make the majority of their money outside of farming, Banack added. The average Alberta farm family got just 17 per cent of its income from farming last year, according to the reports. "The idea that we're making a huge living out here is maybe exaggerated."

Canadians continue to enjoy some of the cheapest food in the world, according to the reports, spending about 10 per cent of their income at the grocery store.

That's not a plus for farmers, Banack said, who, by his group's estimates, get about 27 cents out of every dollar spent on groceries. He encouraged residents to buy Canadian-made products to better support local growers.

Local potato farmer Wayne Groot said he was hoping for another successful season. "The market's good right now and we've got lots of snow," he said, but we could also see a repeat of last year's floods. "Who knows what our year's going to be like?"

The reports can be found at

Kevin Ma

About the Author: Kevin Ma

Kevin Ma joined the St. Albert Gazette in 2006. He writes about Sturgeon County, education, the environment, agriculture, science and aboriginal affairs. He also contributes features, photographs and video.
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