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Agribusiness Takes all: 90 years of Canadian net farm income

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    Agribusiness Takes all: 90 years of Canadian net farm income

    Honestly thought someone else would trip across this article before I did, but here it is:
    http://www.darrinqualman.com/canadian-net-farm-income/ http://www.darrinqualman.com/canadian-net-farm-income/

    Here's the graph of net income and gross income:

    Click image for larger version

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    Canadian net farm income remains low, despite a modest recovery during the past decade. In the graph above, the black, upper line is gross farm revenue. The lower, gray line is realized net farm income. Both measures are adjusted for inflation. And, in both cases, taxpayer-funded farm support payments are subtracted out, to remove the masking effects these payments can otherwise create. The graph shows farmers’ revenues and net incomes from the markets.

    The green-shaded area highlights periods of positive net farm income; the red-shaded area marks negative net income periods. Most important, however, is the area shaded blue—the area between the gross revenue and net income lines. That area represents farmers’ expenses: the amounts they pay to input manufacturers (Monsanto, Agrium, Deere, Shell, etc.) and service providers (banks, accountants, etc.). Note how the blue area has expanded over time to consume almost all of farmers’ revenues, forcing Canadian net farm income lower and lower.

    In the 23 years from 1985 to 2007, inclusive, the dominant agribusiness input suppliers and service providers captured 100 percent of Canadian farm revenues—100 percent! During that period, all of farm families’ household incomes had to come from off-farm employment, taxpayer-funded farm-support programs, asset sales and depreciation, and borrowed money. During that time, farmers produced and sold $870 billion worth of farm products, but expenses (i.e., amounts captured by input manufacturers and service providers) consumed the entire amount.

    Bringing these calculations up to date, in the 32-year period from 1985 to 2016, inclusive, agribusiness corporations captured 98 percent of farmers’ revenues—$1.32 trillion out of $1.35 trillion in revenues. These globally dominant transnational corporations have made themselves the primary beneficiaries of the vast food wealth produced on Canadian farms. These companies have extracted almost all the value in the “value chain.” They have left Canadian taxpayers to backfill farm incomes (approximately $100 billion have been transferred to farmers since 1985). And they have left farmers to borrow the rest (farm debt is at a record high–just under $100 billion). The massive extraction of wealth by some of the world’s most powerful corporations is the cause of an ongoing farm income crisis.

    #2
    Why did he adjust for inflation?

    Comment


      #3
      we should spray a little more fungicides and start growing soybeans and corn with input prices starting for seed alone 100 dollars or better. NOT:

      Comment


        #4
        take out supply management farms and what do the big input suppliers grab in total as a percent; 110% of net?

        Comment


          #5
          Interesting chart. According to the graph 15% of gross is net profit. Seems low to me, recent discussion with the bank suggested in the 30% range is good normal, I'm a bit ahead of that personally but am super cheap!

          Comment


            #6
            I thought I shared this when it first came out, I certainly intended to. It usually goes real quiet around here if I mention something that might in some way have a connection with the NFU as Darrin does. We'll see it it works any different for you.

            I don't know why it is adjusted for inflation - does that make a difference to the result in this case?

            Comment


              #7
              Easy to blame industry suppliers and yes I believe they price products based on our returns and what we are willing and able to pay vs what they should charge based on reasonable business practice / profit. However look when the blue area takes off, kinda from the 60s forward with the adoption of widespread use of fertilizer and herbicides. Think about your own farm in the last 15yrs how your choice of inputs have changed. Instead of one chem pass most are 2/3/4 or more apps, "normal" fert rates have doubled in that time. We all have it ingrained in our heads we have to produce more to be successful, but there comes a point where you start going backwards.

              Comment


                #8
                This chart really shows how the establishment of the cwb in the early 40's has driven down net farm income to a negative return till its abolishment in 2008 and then clearly a return of farm profitability.

                Agribusiness is simply asking you for your money in exchange for their product, they will gladly take every cent you can borrow. the trick sometimes is to say no.

                Comment


                  #9
                  Why should we be surprised tha net income as a percent of total for all farms has dropped during a period when the number of farmers has plummeted. Instead of millions of small farmers subsisting at poverty levels, there are now very few to distribute that net amongst. But those few who remain. I'll Take a big piece of a big pie versus a small piece of a small pie by any day.

                  Comment


                    #10
                    Originally posted by AlbertaFarmer5 View Post
                    Why should we be surprised tha net income as a percent of total for all farms has dropped during a period when the number of farmers has plummeted. Instead of millions of small farmers subsisting at poverty levels, there are now very few to distribute that net amongst. But those few who remain. I'll Take a big piece of a big pie versus a small piece of a small pie by any day.
                    I think what you meant to say was you'd take a small piece of a bigger pie rather than a big piece of a small pie. Still a sign of failure though if despite farms getting bigger, getting "more efficient", more productive they can only retain a declining share of gross farm income as net. It's a sign that the system isn't working in farmers favour which ties in with what most people on this site share on a daily basis - getting squeezed from both sides with higher input costs and grain prices what they were decades ago in some cases.
                    How big is the piece of pie farmers are getting today compared to the rest of society? Compared to the earliest dates on this graph farmers have slipped catastrophically compared to people in most other sectors of employment. Sure most are asset millionaires but that doesn't put bread on the table. Seems plenty on here go on a lot on holidays and drive nice vehicles but so does the lowly secretary working a town job, never mind the dentists, lawyers and doctors. Look at the teachers back then who were housed by local farm families in rotation if I understand correctly. How many quarters does a farmer have to work today to net what a single young teacher earns?
                    The area of AB we were in, close to yours AF5, there were virtually no families full time in agriculture other than the Hutterites. For miles around in every direction nearly every farm family had one partner working off farm - sometimes both. Combine that with debt levels at a record high and it really doesn't paint a rosy picture.

                    Comment


                      #11
                      Originally posted by grassfarmer View Post
                      I think what you meant to say was you'd take a small piece of a bigger pie rather than a big piece of a small pie. Still a sign of failure though if despite farms getting bigger, getting "more efficient", more productive they can only retain a declining share of gross farm income as net. It's a sign that the system isn't working in farmers favour which ties in with what most people on this site share on a daily basis - getting squeezed from both sides with higher input costs and grain prices what they were decades ago in some cases.
                      How big is the piece of pie farmers are getting today compared to the rest of society? Compared to the earliest dates on this graph farmers have slipped catastrophically compared to people in most other sectors of employment. Sure most are asset millionaires but that doesn't put bread on the table. Seems plenty on here go on a lot on holidays and drive nice vehicles but so does the lowly secretary working a town job, never mind the dentists, lawyers and doctors. Look at the teachers back then who were housed by local farm families in rotation if I understand correctly. How many quarters does a farmer have to work today to net what a single young teacher earns?
                      The area of AB we were in, close to yours AF5, there were virtually no families full time in agriculture other than the Hutterites. For miles around in every direction nearly every farm family had one partner working off farm - sometimes both. Combine that with debt levels at a record high and it really doesn't paint a rosy picture.
                      No, I meant a big piece of a big pie. Look at the Blue, inflation adjusted gross farm income is far higher than any time in history. Do you really expect each remaining farmer who now grows as much production as 100 farmers did a century ago, to make as much income as those 100 farmers combined? It is called economies of scale. The fact that total net income is relatively stable over such a long period of time while the number of farmers has declined, tells us that we each get more net income every time someone else leaves the industry. If you can find an industry that has had improvements in efficiency over that same time period, with profit margins remaining the same, I'd like to join it.

                      And yes, people in my area are more than willing to work very hard off the farm for the privilege of farming, for most, it is to subsidize the purchase of shiny equipment that wouldn't be justified on a farm 10 times bigger. That is not a reflection of the state of agricultural profitability, but a reflection of a healthy job market and people who can afford to do what they enjoy in their off work hours. In most cases, there is no economic argument to be had for subsidizing the farm, except that they want to do it.
                      Last edited by AlbertaFarmer5; Mar 20, 2018, 15:53.

                      Comment


                        #12
                        Yep they only took a little from my Grand Father on his section.

                        Then Dad got it a little more but still made a go on his 12 quarters.

                        Now it starts to move wider and WE get it up the Ass farming half the country.

                        Yea its working for one group every one who feeds on farmers.

                        Comment


                          #13
                          Originally posted by wiseguy
                          They never took nothing when we summerfallowed !
                          Nothin to give! Blew it all on diesel and cultivator shovels!

                          Comment


                            #14
                            Originally posted by wiseguy
                            They never took nothing when we summerfallowed !
                            #summerfallowerall !!

                            Except for the fuel merchant and the hardware store where you bought shovels... but then some of you are like my father in law, where the black paint barely wears off the steel.

                            Comment


                              #15
                              Originally posted by wiseguy
                              agri business

                              What a game

                              Canola seed, fertilizer, and spraying

                              Takes most of the Grain !
                              After paying bills ......

                              Comment

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