Realized net income down in Sask. last year, but farmers, ag expert optimistic about 2020

·4 min read

In the fall of 2019, Bernie McClean had to dry every single bushel of canola on his farm in northwest Saskatchewan — something he never had to do before.

Weather was just one of various challenges farmers in the province had to deal with last year.

According to Statistics Canada, realized net farm income was up in six provinces, but not in Saskatchewan, where farmers saw a $307 million decline — the largest in Canada. Lower oilseed receipts contributed to the drop, said a Statistics Canada report released this week.

"The real difficulties actually began in the fall of 2019," said McClean.

"Excessive amounts of rain during harvest that turned into cold weather and actually eventually it turned into a fair bit of snow. And that stopped harvest completely. There were a lot of areas that the snow melted and we were able to get going again.

"But those types of conditions, they increase the costs substantially."

McClean and his family grow grains and oilseeds on their Glaslyn-area farm, including wheat, oats, barley, canola and forage crops. Part of their land recently also became home to bison.

In 2019, he and his family were able to harvest all their crops in the fall, but "it was right to the very final minute to get it done," he said.

"There have been a number of years that have been difficult in the northwest part of Saskatchewan."

Bernie McClean
Bernie McClean

Farm income rose in Canada, not in Sask.

Overall, Canada's farmers saw an increase in realized net income of 14.9 per cent from 2018, to $5.5 billion in 2019. According to Statistics Canada, the increase is the result of higher cannabis and livestock receipts in the country, along with increased program payments.

The drop in realized net income in Saskatchewan, though was 14.4 per cent.

A drop in realized net farm income in Saskatchewan means that there was a reduction in income relative to expenses during that year, explains Richard Gray, a professor at the University of Saskatchewan's department of agricultural and resource economics.

The total net income, which takes inventory change into account, also dropped in Saskatchewan in 2019.

Statistics Canada
Statistics Canada

Trade dispute

Gray says two main factors affected oilseed income.

"The harvest was very long and delayed," he said. "There was significant acreage of canola that was not harvested in 2019 but was left to the spring to harvest in 2020.

"So that grain, which would have been income, was left in the field because of weather conditions."

The other factor, according to Gray, was a large outbreak of African swine fever in China. The disease reduced the size of hog herds in the country, and consequently the demand for oilseeds.

A trade dispute with China also created headaches for the province's canola farmers, after China effectively stopped buying the crop from Canadian producers.

"Saskatchewan farmers produce the most canola in the country and they were the most affected by the drop in price," said Todd Lewis, president of the Agricultural Producers Association of Saskatchewan. He is a fourth-generation farmer in the Gray district, south of Regina.

The trade dispute with China "seems like a long way from Saskatchewan, but it really does come straight to the farm gate here in the province."

There is a possible upside to the Canada-China dispute, said McClean.

"The trade disruption that we've experienced with China has actually taken the blinders off a little bit and allowed us to investigate and further explore other or emerging markets … whether that's export markets or whether it's opportunities right here in Canada," he said.

2020 a better year for Saskatchewan's oilseed farmers

After the lows in 2019, this year has been much better for Saskatchewan oilseed farmers.

"There was an early harvest," said Gray.

"Grain shipments have been at a record level. Because of the recovery in the hog herd in China, soybeans and oilseed prices are actually higher this year. So prices have gone up, volumes [have] gone up."

Bernie McClean
Bernie McClean

According to the provincial government's final crop report, Saskatchewan saw above-average crop quality this year.

While rail disruptions in 2019 caused problems for producers, the economic slowdown due to COVID-19 has allowed for improved movement of grain in 2020, said McClean.

The livestock industry, on the other hand, has been negatively affected by COVID-19, with some slaughter plants closing down, said Lewis.

Farmers and ranchers now have to feed more cattle, but the price for feed grain has gone up, he said.

"So it's been positive for the grain producers."