May 19, 2010

Canada's farm sector will face a global economic downturn with the global recession leaving producers lower consumer demand for their products, particularly red meat, reports analysts.

Analysts say the livestock sectors will continue to struggle.

Cattle farms are expected to lose an average of US$5,195 in 2010 - a drop largely blamed on country-of-origin labelling regulations for meat products in the US and a strong Canadian dollar.

In Manitoba, Quebec and Ontario, net operating incomes for hog producers are expected to be below historical averages this year, mainly because increases in expenses are outpacing higher receipts and programme payments.

And, after record income years in 2008 and 2009, the net income of the average grain and oilseed farm is expected to drop, "having an impact on the overall farm income outlook."

Agriculture Canada forecasts that realised net income for farmers in Alberta will be negative US$516.3 million this year - a 254% drop from US$334.9 million in profit in 2009. In Saskatchewan, the realised net farm income is expected to total US$980 million - a 55% drop from the US$2.2 billion forecast in 2009.

While numbers are expected to be down across the country, it's still fixing to be a better than average year. The forecast drop for 2010 appears worse because 2008 and 2009 were record income years.

"Nobody likes to be staring a decrease in income in the face, but actually it's no real surprise," said Greg Marshall, president of the Agricultural Producers Association of Saskatchewan. "I guess we all kind of expected that this was coming with the increase in input costs and lower commodity prices and the lack of support from existing safety net programmes," he added.