OFA Commentary 3631
Estimates validate risk management needs
By Bette Jean Crews, President of the Ontario Federation of Agriculture
Agriculture and Agri-Food Canada (AAFC) released three reports this week about the future of Canada’s agriculture sector. In them, AAFC provides a positive outlook for the sector, with higher than expected net farm incomes projected for 2010.
While these reports paint a healthier picture for the agriculture industry, it also points to the volatility and unpredictability of the industry. AAFC reported last year that the Ontario Net Farm Income for 2010 could be a devastating loss of $500 million. Volatile markets and a favourable growing season have changed this projection to a positive net farm income of around $816 million for Ontario. This new estimate is also above the TD Bank Financial Group’s annual outlook report on Canadian agriculture that forecast a positive $97 million net farm income in Ontario in 2010. That report was only released in November.
While the news is welcomed by the farm community it simply demonstrates how volatile the farm business environment can be. It serves as a reminder that farmers cannot hedge or insure themselves against this income risk. We need a collective risk insurance program shared across farmers and governments.
Each province has a unique footprint in the Canadian agriculture sector, each with its own strengths and weaknesses. The market risks across provinces are different as are the risks faced across each of the commodity sectors. The similarity across all provinces and commodities is the singular need for workable and predictable programs to enable farmers to sustain their farms across these volatile swings in income – swings that are dictated by forces well beyond the control of our good farm managers.
OFA continues to work closely with agri-industry partners through the Ontario Agriculture Sustainability Coalition (OASC) to ensure the programs needed. Together, we are working with federal and provincial governments to agree to the programs that will help manage volatility and make our businesses more predictable. Our economy relies on a healthy agriculture sector. In 2009, the Ontario farm sector generated $3.5 billion in GDP before considering depreciation. With a stable and predictable outlook, the potential goes well beyond that level of economic contribution.
We are also keeping close contact with the Ontario Ministry of Finance to advise on the fiscal and policy needs required for a sustainable and profitable future for farming. We met with Finance Minister the Honourable Dwight Duncan three months ago to outline our pre-budget agenda for farming. In it, we agreed that risk management programs are needed to safeguard Ontario’s agriculture sector for generations to come.
Agriculture and Agri-Food Canada’s farm income projections clearly demonstrate that agriculture is not a predicable industry in these turbulent times. Although the outlook for our industry appears to be positive based on recent reports, it’s our responsibility to prepare for the future risks and external pressures we will undoubtedly face as farmers. It is time we learned from our mistakes and our forecasts.
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