Now it’s Even Easier to get Those Farm Mortgages!
No, farm mortgages haven’t had their rules drastically changed to make them easier to obtain. But the fact that farmers are set to have much higher income levels in 2012 than in 2011 means that they’ll now have more money to use for those farm mortgages!
It’s the annual Farm Income Forecast that’s prepared by Agriculture and Agri-Food Canada that shows that farm income levels for 2012 are going to reach record highs thanks mostly to the drought in the States last summer. While stats haven’t yet been finalized, it looks as though Canadian farmers increased their income by about 14 per cent – reaching a record $13.1 billion in that year alone. Farmers in Alberta did even better, increasing their income by 47 per cent from 2011, reaching a record $2.6 billion.
“It certainly has been an exciting year,” says Matt Sawyer, a farmer who lives in Acme, Alberta. “In the fall, prices of wheat were basically the highest we’ve ever been able to get right off the combine, and that was largely due to the drought in the U.S.”
Sawyer also agrees with the Agriculture and Agri-Food’s Medium Term Outlook report, which states that these high incomes are no fluke, but rather something that can be expected to continue on for the next decade.
“Agricultural commodities are in demand,” he says. “It’s a growing population and there’s an emerging middle class around the world who are looking at eating more protein and that sort of thing.”
But while farmers growing wheat crops may be rolling around in all their money, Canadian farmers with cattle crops are still facing trouble. While it’s no longer the 1990s and we no longer believe that we have a farming crisis on our hands, that increase in wheat prices isn’t just hitting the emerging middle class, but those farmers that need to feed their cattle too.
Brenna Grant, analyst at CanFax that oversees the Canadian Cattlemen’s Association, said that while cattle farmers did still see an increase in their income, it wasn’t anything near what wheat farmers did. And it was even less than what the farmers were expecting.
“Our cow-calf producers are finally in the black, which is a good thing. But it’s a much smaller positive than we were anticipating earlier in the year,” he says.
And suffering even more than the cattle farmers are the hog farmers. They were much more directed by the cost of higher feed, as pigs aren’t as happy to wander around a huge field and chew on grass the way cows are. For hog farmers, net operating income will most likely show a decline of 39 per cent, to only $54,272.
So for many, it’s a great time to be a farmer right now. But Lynn Jacobson of Wild Rose Agriculture Producers, tells farmers not to get too caught up in the high times.
“We’re optimistic that grain prices will continue,” he says. “But it’s tempered with some realism too. When things are good, people start to say it’s going to last forever. Well, we saw some of those predictions in the 70s when grain prices were high. And then the 80s came.”