July 8, 2022 | Tom Tavani
It’s summer time in 2022, and the living is far from easy for farmers as inflation has hit a 39-year high and the central bank keeps hiking interest rates to fend off a recession.
Gas, diesel and housing prices are through the roof. Groceries are so expensive, many more people are turning to food banks to feed their families. While Ontario’s provincial government recently provided some relief by reducing its gas tax, many are still struggling to make ends meet.
Canadians are really feeling the pinch. A recent Angus Reid poll showed that 45 per cent of the population think they’re worse off than they were last year. Economic experts are predicting that the bad news may continue for the next 18 months or more.
The spiraling inflation rate – which hit 7.7 per cent in May is caused by events that are mainly beyond our control. Supply chain disruptions in many sectors, coupled with the Russian invasion of the Ukraine are the main culprits.
While most younger farmers are experiencing the effects of inflation for the first time, many older generation farmers remember 1981, when the bank rate hit nearly 18 per cent.
Many farmers went out of the business because they could not make the numbers work.
But this time is different, according to retiring Royal Bank of Canada vice-president Gwen Paddock. In a Country Guide article, she basically says that today, farmers are more likely to treat their operations as businesses. Using cash-flow analysis, risk management strategies and other financial tools, farmers are better positioned to ride out the tough times.
Many have figured out that, in order to survive and thrive, funds have to be tucked away during the good times so they can be used to build back better during the bad times.
There are many more resources these days to help farmers think and operate more strategically as a business. Farm Management Canada, for example, has a wealth of resources. FMC regularly puts on informative webinars and events that provide practical advice that’s useful whatever the size of your operation. Their annual AgEx conference is excellent, and this year, has the uplifting theme of Reaching New Heights.
While we are currently in a bit of an economic storm, our agri-food industry is resilient, and if we are smart and apply good business management practices, we can come out the other side better than before.
Tom Tavani is the General Manager of the Christian Farmers Federation of Ontario. The CFFO Commentary represents the opinions of the writer and does not necessarily represent CFFO policy. The CFFO Commentary is heard weekly on CFCO Chatham, CKXS Chatham, CKNX Wingham, and CHLP Listowel.