February 11, 2008

 

2008 a tough year for Canada's livestock farmers but good for grain

 

 

Record high prices should mean a good year for grain farmers but livestock farmers, especially hog producers, are facing tough times, Agriculture Canada said Friday (February 11, 2008).

 

"Net farm income for the average farm in Canada is forecast at $41,021 in 2008, an 16-percent increase," the department said in its annual farm income forecast.

 

"Average non-farm income is expected to be $55,386 per farm. At $96,407, total farm family income is expected to be substantially higher than in 2007."

 

However, net farm income is likely to fall for the average hog or cattle operation.

 

"Higher input costs are going to cut into farmers' profits, especially in the cattle and hog sector, as they are expected to face significant income declines in the next two years," said Jan Dyer of Agriculture Canada.

 

Record crop prices that bolster grain farmers mean higher costs for livestock farmers.

 

Crop receipts overall are expected to rise 14 per cent to a record $20.7 billion in 2008, the report said. Prices for the major grain and oilseed crops are expected to increase substantially.

 

For cattle and hogs, however, higher feed and energy costs and lower prices are expected to push incomes down.

 

"Total livestock cash receipts are expected to be slightly lower compared to 2007, mostly due to lower prices for cattle and hogs," the report said.

 

"Total cattle receipts are expected to drop by about two per cent, while hog receipts are expected to fall by another one per cent."

 

Government payments of $3.8 billion used to support farm programmes are expected to be unchanged.

 

The hog sector would face not only high feed prices but exchange rate changes that affect export coming in the midst of a cyclical downturn.

 

Although the cattle sector is also affected by the exchange rate and feed prices, they have alternatives pastures and a much longer production cycle, the report said.