Farm business finance and spending plans for 2010
April 13, 2010 By Farm Credit Canada
In 2010, 49 per cent of Canadian producers and agribusiness and
agri-food operators surveyed by Farm Credit Canada (FCC) plan to pay
down debt, 29 per cent say they won’t spend much differently than in
2009 and 22 per cent will seek more financing.
In 2010, 49 per cent of Canadian producers and agribusiness and agri-food operators surveyed by Farm Credit Canada (FCC) plan to pay down debt, 29 per cent say they won’t spend much differently than in 2009 and 22 per cent will seek more financing.
|Between 30 and 34 per cent of surveyed producers in Ontario and Saskatchewan expect to spend significantly more on inputs during the 2010 season.
The numbers are from an FCC Vision Panel national survey of primary producers and agribusiness operators. This is the second year that the provider of financial and business services to the agriculture industry has completed the study.
“We wanted to better understand how external factors such as the global economic situation impact spending decisions, and the results show that many respondents haven’t altered their plans much from 2009,” explained Greg Stewart, FCC president and chief executive officer. “This is good news because it appears that respondents haven’t been as great.”
The study, completed in December, found that producers (50 per cent) are significantly more likely than agribusiness and agri-food operators (42 per cent) to report that they plan to pay down existing debt in 2010, while operators (44 per cent) are significantly more likely than producers (26 per cent) to report that they do not plan to make changes to their financing in the next year.
When the results are analyzed by province, significantly more Quebec producers (38 per cent) report no change to spending than producers from British Columbia (14 per cent), Saskatchewan (24 per cent), Ontario (24 per cent) or the Atlantic provinces (nine per cent). Poultry producers (43 per cent) are significantly more likely to state they plan to seek more financing in 2010 than producers from most other sectors.
Producers and agribusiness and agri-food operators make important business decisions every day, says Barry Smith, FCC vice-president of western Ontario operations. Although agriculture in Ontario is quite stable, he notes that in 2010, those in the agriculture industry will be challenged to figure out which business models can work for their farms.
“Another challenge will be balance,” he said. “Many farmers work full-time at another job, while also trying to increase their farm management knowledge by taking courses.”
Smith suggests producers and agribusiness and agri-food operators look at new and innovative business models.
“It’s always a good idea to think outside the box in the areas of technology and partnerships, both local and international,” he said. “For example, I’ve seen producers looking to optimize production by partnering with greenhouses in Mexico and other countries, and even using satellite positioning technology to understand the variations of their land.”
Faith Matchett, FCC vice-president of eastern Ontario and Atlantic operations, notes that managing cash flow against input costs and interest rates will be two of the top challenges in 2010.
“With interest rates lower than we’ve seen in 50 years, those in the industry need to look closely at their debt structure and be sure to manage their interest rate risk,” she said. “Taking time to do this will help with plans for future development and expansion of their operations.”
Matchett also adds that producers and agribusiness and agri-food operators who may not have strong finance skills should use good software, courses and advisors to help them better understand the numbers side of their operations.
“While, for some, numbers are not the most exciting part of the business, the numbers tell the story. You really need to know your numbers and manage your business accordingly.”
The Vision Panel survey also asked about spending plans in five categories: storage, labour, transportation, inputs and equipment.
The biggest change from the 2009 results is producers’ and agribusiness and agri-food operators’ anticipated spending on inputs. Compared to 39 per cent in 2009, 44 per cent of respondents anticipate no change in spending for 2010.
Ontario (34 per cent) and Saskatchewan (30 per cent) producers are significantly more likely to report plans for increased spending on inputs, as compared to producers from Quebec (18 per cent) or the Atlantic provinces (15 per cent).
The survey was sent to a total of 2,646 producers and agribusiness and agri-food operators in late November 2009. Of these, 1,172 completed the survey, translating into a 44 per cent response rate.
To view the survey results, visit http://www.fccvision.ca/InAction.aspx .
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