Outlook for 2008 good for grain farmers, bad for livestock producers

Record high prices should mean a good year for grain farmers but livestock farmers, especially hog producers, are facing tough times, Agriculture Canada said Friday.

"Net farm income for the average farm in Canada is forecast at $41,021 in 2008, another 16 per cent increase," the department said in its annual farm income forecast.

"Average non-farm income is expected to be $55,386 per farm. At $96,407, total farm family income is expected to be substantially higher than in 2007."

However, it said net farm income is likely to fall for the average hog or cattle operation.

"Higher input costs are going to cut into farmers' profits, especially in the cattle and hog sector, as they are expected to face significant income declines in the next two years," said Jan Dyer of Agriculture Canada.

The higher crop prices that bolster grain farmers mean higher costs for livestock farmers.

"Crop producers are experiencing record prices," Dyer said. "We haven't seen prices like these even in history."

Crop receipts overall are expected to rise 14 per cent to a record $20.7 billion in 2008, the report said. Prices for the major grain and oilseed crops are expected to increase substantially.

For cattle and hogs, however, higher feed and energy costs and lower prices are expected to push incomes down.

"Total livestock cash receipts are expected to be slightly lower compared to 2007, mostly due to lower prices for cattle and hogs," the report said.

"Total cattle receipts are expected to drop by about two per cent, while hog receipts are expected to fall by another one per cent."

Government payments under various support programs - a total of $3.8 billion - are expected to be stable this year, on a per-farm basis.

Hog farms are going to be buffeted by a number of factors.