COUNT­ING YOUR CHICK­ENS

This year’s crop yield may be dis­ap­point­ing, but over­all the farm­ing sec­tor is in good shape

Alberta Venture - - Thebriefing] -

>>> This fall proved to be a bit of a heart­breaker for many in Al­berta’s agri­cul­tural sec­tor, as what looked to be a great sea­son turned sour when a wet fall and some early snow­storms flat­tened crops and buried canola fields.

But, ac­cord­ing to a re­cent re­port from Farm Credit Canada, the over­all news for Canada’s agri­cul­tural sec­tor – and for Al­berta’s, which was about av­er­age on most of the in­di­ca­tors – is good. The FCC found that Canada’s farms are in a strong po­si­tion to meet their fi­nan­cial obli­ga­tions, as as­set val­ues climb while debt re­mains at man­age­able lev­els. “At the na­tional level – and Al­berta is right in the mix – we’re in very good shape,” says J.P. Ger­vais, vi­cepres­i­dent and chief agri­cul­tural econ­o­mist with the FCC. “There are some head­winds com­ing in, and we need to be aware of this, but they’re not that strong at the mo­ment.”

Ger­vais points to the ra­tio of as­sets (cash, ac­counts re­ceiv­able and in­ven­tory) to li­a­bil­i­ties (debts and ac­counts payable) for ev­i­dence. Na­tion­ally, it stands at 2.38 per cent. In Al­berta, it’s 2.58 per cent, sec­ond only to Saskatchewan’s 3.5 per cent. “A high as­set to debt ra­tio is not nec­es­sar­ily a wealth in­di­ca­tor, but it’s more of a sign of flex­i­bil­ity in the busi­ness,” Ger­vais says. “If there’s an op­por­tu­nity to ex­pand, they have the abil­ity to stretch them­selves out a bit more.”

In terms of head­winds, Ger­vais points to the low prices be­ing paid for cat­tle, a re­sult of an over­build of North Amer­i­can herds in re­cent years. “We’re go­ing to have to see prices come down at the re­tail level to see things im­prove,” he says. “They’ve al­ready started, to some ex­tent. It’s the time­line I’m not cer­tain of.”

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