Canada's ag finances on the right side of the balance sheet Tuesday, January 19, 2016 by BETTER FARMING STAFFCanada’s agriculture sector is in good shape and able to withstand financial shocks, according to a major industry measure released Tuesday by Statistics Canada.The StatsCan balance sheet of the agricultural sector to Dec. 31, 2014 indicates national farm equity at the end of 2014 was up more than nine per cent compared to the end of 2013, reaching $444.2 billion.The value of farm assets also rose 8.9 per cent nationally in the same time period to $524.8 billion, “primarily as a result of continued gains in the value of farmland,” the report said, calculating the farmland value gain to be more than 10 per cent.In that time period as well, farm liabilities increased 6.8 per cent to $79.7 billion. The report said the national debt-to-asset ratio in 2014 was 15.2 per cent — the lowest recorded since 1997.That low debt-to-asset ratio “means that it (the sector) can absorb some shocks because liabilities, or debt did not go up all that much,” says Alfons Weersink, a professor in the University of Guelph department of food, agricultural and resource economics. The ag sector is in “a fairly strong financial position.”However, Weersink cautions that the numbers were an aggregate of everyone in the sector and not everyone is equally well off. “Not only will there be differences across farm types — let’s say dairy to a corn soybean farmer — but there will be differences in location, and there will be differences due to size, and so it hides some differences — the heterogeneity within the sector that is continuing to grow.“There’s just bigger differences between farmers,” he says, explaining why the sector is diversifying at a greater rate. “We’ve got some smaller niche farmers, bigger commodity farmers - it’s just a more heterogeneous sector and so the financial position will reflect that.”Weersink and the report both credited most of the growth in asset values to the increase in farmland values. “Farmland has continued to increase in value despite the drop in grain and oilseed prices,” Weersink says. “The rate of increase has started to slow but it still continues to rise in most parts of the country.”The report notes that a $2.2 billion decrease in the value of crop inventories in 2014 moderated the farm asset increase. It attributed the decrease to softening prices and production which “returned to more normal levels after the bumper crop of 2013.Ontario numbers are performing just under the national numbers in a similar growth trend: equity ($124.1 billion) increased 8.7 per cent at the end of 2014 compared to a year before; assets ($145.5 billion) rose 8.3 per cent year to year; and total liabilities ($21.4 billion) increased 6.1 per cent.The numbers are a year old, but Weersink says there are indications the agriculture sector continues to be strong. He notes that the financial position of Farm Credit Canada’s clientele is strong. “They don’t have many people in tough circumstances right now. But it definitely could change with the continued drop in commodity prices, if interest rates ever rose.” BF New barn safety regulations not among Ontario ag minister's 2016 priorities Ontario's rural municipalities clamour for funding changes
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