N.S., P.E.I. agriculture income at "rock bottom": report

A new study on farm economic viability in Nova Scotia and Prince Edward Island finds the two provinces' farmers "now earning less than at any time in the last four decades."

That, in turn, leaves the provinces' rural communities at serious risk, according to the report released Friday by GPI Atlantic, a non-profit think tank at Glen Haven, N.S., about 30 km west of Halifax.

The membership-based research agency, which measures social, economic and environmental factors in what it calls the "genuine progress index" (GPI), said "every key indicator of farm economic viability in Nova Scotia and P.E.I. is in sharp decline," including:

• net farm income, which GPI Atlantic said has dropped by an average of 91 per cent in Nova Scotia and 92 per cent in P.E.I. since 1971, reaching the "lowest levels ever recorded" in both provinces in 2007, with both provinces reporting negative net income in four out of the last six and five out of the last seven years respectively;
• expense-to-income ratios, which rose from an average of 82 per cent in the 1970s to an average of 97 per cent in the last decade, reaching 100 per cent in Nova Scotia and 102 per cent in P.E.I in 2006;
• total farm debt, which rose by 146 per cent in Nova Scotia and 445 per cent in P.E.I. between 1971 and 2006, with the total debt-to-net farm income ratio in P.E.I. reaching 4,700 per cent in 2006, well above the 600 per cent ratio estimated in a "healthy" farm sector; and
• solvency ratios (total liabilities (debt) divided by total assets (capital value)), rising by 106 per cent in Nova Scotia and 143 per cent in P.E.I. since 1971.

Jennifer Scott, the GPI Atlantic report's co-author, said the economic benefits to rural communities generated by farming include $460 million in business spending in Nova Scotia and $390 million in P.E.I., and will be "seriously endangered as farms fail."

Annual farm expenditures in Nova Scotia also now generate 6,600 full-time equivalent jobs in agriculture, and nearly 3,700 additional indirect and induced jobs, she noted.

A key cause of declining farm viability, Scott wrote, is depressed farm product prices, due to problems in global commodity pricing and trade, consumer demand for the cheapest price for food regardless of its origin or cost of production, and continued consolidation among retailers and processors.

The report's recommendations for both provinces include:

• market diversification, to increase buyer competition;
• regulation to prevent "excessive" mergers of companies in the food system;
• more supply management, to ensure food prices don't fall below a "reasonable" cost of production;
• stimulation of increased demand for local products; and
• payments to farmers for provision of environmental goods and services, such as conserving wetlands or protecting water quality.

That last concept has already been developed in P.E.I. through the Alternate Land Use Services (ALUS) program, which was budgeted in April for $750,000 for 2008. ALUS, a concept developed in Manitoba, is intended to provide incentives for farmers such as financial payments, tax measures or other considerations.

As first proposed, an ALUS program would help fund farmers' work on initiatives such as riparian areas, waterfowl and wildlife habitat, clean water, flood control or carbon sequestration.

Scott said she was "encouraged by a new openness to shifting away from reliance on food imports towards the development of a healthy local food system."

This, she said in a release, "will require the collaboration of all economic, government, and social sectors, including the media and a public more discerning and determined to buy and eat local food and to support Maritime farmers."

Copyright © 2008, Alberta Farmer