presentation to the 2011 abare outlook conference andrew goldstein march 1, 2011 farm profitability...
TRANSCRIPT
Presentation to the 2011 ABARE Outlook ConferenceAndrew Goldstein
March 1, 2011
Farm Profitability– The Canadian Experience –
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Structure of Canadian Primary Agriculture
Distribution of Farms by Sales Class
65%(Less than
$100,000)
25%($100,000 to
$499,999)
10%($500,000
and Over)
Distribution of Farms by Sales Class
65%(Less than
$100,000)
25%($100,000 to
$499,999)
10%($500,000
and Over)
Distribution of Operating Revenues
by Sales Class
8%(Less than
$100,000)
25%($100,000 to
$499,999)
67%($500,000
and Over)
Distribution of Operating Revenues
by Sales Class
8%(Less than
$100,000)
25%($100,000 to
$499,999)
67%($500,000
and Over)
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Farm size matters… to a point
Percentage of Farms Breaking Even by Farm Type – Excluding Program Payments (Average 2003-2008)
0
10
20
30
40
50
60
70
80
90
100
Less than$10,000
$10,000 to$99,999
$100,000 to$249,999
$250,000 to$499,999
$500,000 to$999,999
$1,000,000 andOver
Revenue Class
Per
cent
of F
arm
s
Percentage of Farms Breaking Even by Farm Type – Excluding Program Payments (Average 2003-2008)
0
10
20
30
40
50
60
70
80
90
100
Less than$10,000
$10,000 to$99,999
$100,000 to$249,999
$250,000 to$499,999
$500,000 to$999,999
$1,000,000 andOver
Revenue Class
Per
cent
of F
arm
s
Cattle
PoultryDairy
Grains
Hogs
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Farm size matters… to a point
Percentage of Farms Breaking Even by Farm Type – Including Program Payments (Average 2003-2008)
0
10
20
30
40
50
60
70
80
90
100
Less than$10,000
$10,000 to$99,999
$100,000 to$249,999
$250,000 to$499,999
$500,000 to$999,999
$1,000,000 andOver
Revenue Class
Per
cent
of F
arm
s
Percentage of Farms Breaking Even by Farm Type – Including Program Payments (Average 2003-2008)
0
10
20
30
40
50
60
70
80
90
100
Less than$10,000
$10,000 to$99,999
$100,000 to$249,999
$250,000 to$499,999
$500,000 to$999,999
$1,000,000 andOver
Revenue Class
Per
cent
of F
arm
s Cattle
PoultryDairyGrains
Hogs
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Significant profitability gap betweentop and bottom performers
Average Net Operating Income(2003-2008)
-20
0
20
40
60
80
100
120
140
160
180
2003 2004 2005 2006 2007 2008
NO
I ($/
Acr
e)
Bottom 20%Top 20%
Average Net Operating Income(2003-2008)
-20
0
20
40
60
80
100
120
140
160
180
2003 2004 2005 2006 2007 2008
NO
I ($/
Acr
e)
Bottom 20%Top 20%
Note: Sample of Grain and Oilseed farms in with over 1000 acres and over $100K in revenue.
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Top performers have higher revenues per acre
Note: Sample of Grain and Oilseed farms in Saskatchewan’s Brown soil zone with over 1000 acres and over $100K in revenue. Farms ranked by average PM from 2003 – 2008.
Comparison of the Revenue Composition of Producers(2003-2008)
0
20
40
60
80
100
120
Cereals Oilseeds Pulses
$/A
cre
Bottom 20%Top 20%
Comparison of the Revenue Composition of Producers(2003-2008)
0
20
40
60
80
100
120
Cereals Oilseeds Pulses
$/A
cre
Bottom 20%Top 20%
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Controlling costs is a key success factor
Note: Sample of Grain and Oilseed farms in Saskatchewan’s Black soil zone with over 1000 acres and over $100K in revenue. Farms ranked by average PM from 2003 – 2008.
Comparison of Expense Outlays of Producers(2003-2008)
0
10
20
30
40
50
60
Fertilizer Pesticide Seed Fuel andMachinery
Other Expenses
$/A
cre
Bottom 20%Top 20%
Comparison of Expense Outlays of Producers(2003-2008)
0
10
20
30
40
50
60
Fertilizer Pesticide Seed Fuel andMachinery
Other Expenses
$/A
cre
Bottom 20%Top 20%
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Off-farm income is playing an increasing role
Comparison of the Incidence of LFI and NNFI(1983-2003)
0
10
20
30
40
50
1983 1987 1993 1997 2003
Per
cent
Comparison of the Incidence of LFI and NNFI(1983-2003)
0
10
20
30
40
50
1983 1987 1993 1997 2003
Per
cent
Negative Net Farming Income (NNFI)
Low Family Income (LFI)
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Farm net worth has increased significantly
Average Farm Net Worth(2003-2008)
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
2003 2008
Unprofitable
Profitable
Average Farm Net Worth(2003-2008)
$600,000
$700,000
$800,000
$900,000
$1,000,000
$1,100,000
$1,200,000
$1,300,000
$1,400,000
$1,500,000
2003 2008
Unprofitable
Profitable
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Primary Agriculture: Part of a Broader SystemThe Canadian Agriculture and Agri-Food System
(2008)
Input Suppliers$24 B
Consumer Spendingon Food and Beverages
$147 B
Primary Agriculture$42 B
Food Processing$88 B
Food Retail/Wholesale$96 B
Foodservice$51 B
Agriculture andAgri-Food Sector
Imports$7.9 B
Exports$21.2 B
Imports$18.5 B
Exports$17.1 B
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