Media Clipping — Saturday August.16th, 2008, The Charlottetown Guardian

Island farmers earn least in four decades

Farmers in Nova Scotia and Prince Edward Island are now earning less than at any time in the last four decades, so little in fact that rural communities in both provinces are at serious risk.

That's the conclusion of a new report on farm economic viability released today by GPI Atlantic, the Nova Scotia based non-profit research group that is constructing new measures of progress for the province.

Eddy Dykerman, past president of the P.E.I. Federation of Agriculture, says that dire assessment rings true.

"I would agree with that,' he said, noting that the state of farming in P.E.I. is as bad today as it has every been.

"And there doesn't seem to be any optimism...The optimism is pretty well gone.'

He said usually farmers get on a cycle and can ride out a bad wave, but the situation has been so difficult for so long that many are simply giving up.

He said the hog sector is suffering the most but beef operations are also in a dismal state.

Supply management sectors like dairy, he added, are "doing pretty well' by comparison.

Every key indicator of farm economic viability in Nova Scotia and P.E.I. is in sharp decline, according to the report.

• Net farm income has dropped by an average of 91per cent in Nova Scotia and by 92 per cent in P.E.I. since 1971, and in 2007 reached the lowest levels ever recorded in both provinces. Nova Scotia farms have recorded negative net farm income (where income no longer covers expenses) in four of the last six years, as have P.E.I. farms in five of the last seven years.
• In Nova Scotia, the expense to income ratio increased from an average of 82 per cent in the 1970s to an average of 97 per cent in the last decade, and in P.E.I. it rose from an average of 74 per cent to 98 per cent during the same 35-year period-in recent years far exceeding the 80 per cent threshold estimated as needed for a healthy farm sector. In 2006 the expense to income ratio reached 100 per cent for Nova Scotia farms and 102 per cent for P.E.I. farms. This indicates that the prices paid to producers for their products are inadequate relative to rising input costs, and are not keeping pace with farm expenses, concludes GPA Atlantic.
• Total farm debt increased by 146 per cent in Nova Scotia, and by 445 per cent in P.E.I., between 1971 and 2006. It is estimated that, in a healthy farm sector, the total debt to net farm income ratio should not exceed 600 per cent -- a level achieved in the 1970s and part of the 1980s -- in order for farmers to service their debt. That ratio reached an astonishing 4,700 per cent in P.E.I. in 2006_nearly eight times the recommended 600 per cent threshold.
• The solvency ratio (total liabilities or debt divided by total assets or the capital value of farms) increased by 106 per cent in Nova Scotia and by 143 per cent in P.E.I. since 1971, indicating that Nova Scotia and P.E.I. farms are becoming much less sustainable, with the rate of farm debt increase rapidly outstripping any appreciation in the capital value of farms.

Report author Jennifer Scott said she was shocked by the results.

Extensive GPI Atlantic interviews with Nova Scotia and P.E.I. farmers produced a number of recommendations to improve farm economic viability, including:

• Market diversification to increase buyer competition (and therefore prices) for food products.
• Regulation to prevent excessive mergers of companies in the food system.
• Greater supply management to ensure that food prices not fall below a reasonable cost of production.
• Stimulation of increased demand for local products, for example through local procurement policies by businesses, retail stores, universities, schools, hospitals, and government agencies. This solution may be aided by escalating gas prices, as transportation becomes more expensive and local food thus more competitive.
• Payments to farmers for provision of environmental goods and services (e.g. conserving wetlands and protecting freshwater quality).

Copyright © 2008, The Charlottetown Guardian