Media Clipping — Friday August.15th, 2008, Canwest News
Farm incomes in N.S. and PEI hit the dirt
Farmers are not only at the beginning of the consumer food chain - in Nova Scotia and P.E.I., at least, they're at the very bottom of it.
A report released Friday suggests that while there are profits to be made in food these days, they aren't trickling down to farmers in Nova Scotia and Prince Edward Island, who are earning less now than they have in the past 40 years - and that lack of income is putting rural communities at risk.
Net farm income has dropped by an average of 91 per cent in Nova Scotia and by 92 per cent in P.E.I. since 1971, and last year reached the lowest levels ever recorded in either province, according to the report from GPI Atlantic, a Nova Scotia-based non-profit research group that is constructing new measures of progress for the province.
"No society should allow its farmers - the economic and social foundation of many rural communities - to experience such severe economic hardship," said report author Jennifer Scott in a statement. "When we examined this issue for Nova Scotia farms in 2001, we reported the situation was bad. Now, seven years later, it is worse - much worse."
Income failed to cover expenses on Nova Scotia farms in four of the last six years; on P.E.I.'s in five of the last seven. In a healthy farm sector the debt-to-net-income ratio wouldn't exceed 600 per cent; it hit 4,700 per cent in P.E.I. in 2006, the report said.
Farms generate hundreds of millions of dollars in business spending each year. The provinces' economies will take a hit and thousands of jobs will be lost as farms fail, Scott said.
A primary reason for declining farm incomes is low prices paid to producers - which are not reflected in cheaper food prices for consumers, Scott noted. Globalization, cheap imports, consumer demand for cheap food regardless of its origin and consolidation among retailers and processors are factors that keep costs paid to farmers low.
The report makes several recommendations to improve the situation, including regulating mergers by food companies; better supply management to ensure prices don't fall below the cost of production, and stimulating demand for local products.
Farm Economic Viability in Nova Scotia and Prince Edward Island
Authors: Jennifer Scott and Ronald Colman
Are farmers in Nova Scotia and Prince Edward Island earning enough to stay in business?
If not, how will the loss of farms affect jobs and income in rural communities?
Do the prices farmers get for farm products cover their costs of production?
And how do those prices compare to the cost of food in grocery stores?
What, in short, is the future of farming in the Maritimes? — Is farming still a viable institution in the region, and can it survive?
These are some of the provocative questions raised in GPI Atlantic's report on Farm Economic Viability in Nova Scotia and PEI, which examines trends since 1971 in several key indicators of farm economic viability in the two provinces, including:
Net farm income
Expense to income ratio
Farm debt
Total debt to net farm income ratio
Solvency ratio (total liabilities or debt divided by total assets or capital value of farms)
Return on investment
The report also presents the total economic contribution of agriculture to the provincial economies of Nova Scotia and PEI (including direct, indirect, and induced impacts) and to job creation in the two provinces, and it contains specific policy recommendations to improve farm economic viability in the Maritimes.