Weak dollar, cheap oil expected to boost farm income

© AgMedia Inc.


That the value of Canadian farm assets, particularly land, is rising faster than farm debt absolutely does NOT indicate a healthy farm economy because the value of farm land is increasing mostly because of stratospheric price/earnings multiples - a factor this report seems to have ignored and which therefore renders the conclusions of this report effectively meaningless.

More to the point, it is, I suggest, unethical and misleading for the authors of this report to not explore or even mention the "bubble" factor affecting farm land valuations.

I also suggest they didn't explore it, partly because it's not likely that anyone at Ag Canada knows anything about business and/or investment valuation, but more likely because they people paying the bills, the feds, want to make farming look so rosy that they can cut back farm assistance programs yet again.

Stephen Thompson, Clinton ON

Quoted from the print edition of BF August 15, by Mr. Barry Wilson
"Debt levels and servicing costs can only go in one direction-up.
Rising asset values are not a hedge against higher debt except at time of asset sale. Debt is serviced by fluctuating cash flow, not asset worth.
When the next income downturn arrives, producers will quickly realize that changes made to safety net programs in the 2013 iteration of the Growing Forward policy framework have sharply reduced their protection when prices and incomes go south."

Raube Beuerman

For AAFC to claim Canadian agriculture is "healthy" even though land prices are in a price/earnings bubble, would normally be called "making a material misrepresentation" because no business or industry in a price/earnings bubble can ever be healthy.

More to the point, if:

(A) $35 billion of unearned and undeserved quota values were taken off the balance sheet of Canadian agriculture because it's really consumer equity transferred, against their will, from one group in society to another.
(B) farm income was to be revised to show farm incomes based on world prices, instead of artificial prices, for dairy and poultry products:
(C) instead of valuing farmland at its present "bubble" factor of anywhere up to 50 times earnings, it was to be valued at a far-more realistic and sustainable 15 times earnings, including earnings for dairy and poultry farms based on world pricing.

then, and only then, would the AAFC data represent reality.

As it is now, the AAFC picture not only presents a distorted picture of reality, it's a contemptible distortion of reality because even the most-junior level financial analyst knows better than to ignore the material relevancy of what actually affects the numbers being proffered.

Stephen Thompson, Clinton ON

Yup, Meyer says farm assets are rising faster than farm debt.

I heard that in the 70's and the bankers gave money freely because we could cash flow debt against assets. and then the recession hit.

I heard it again in the 1980's. Borrow against the assets but then 1987 hit. Recession with double digit interest rates.anyone that buys into government rhetoric is doomed to repeat history.

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