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SW Saskatchewan | In the machinery forum the question is asked about what will happen to farm machinery manufacturers in the next ag downturn. My question is what will happen to farmers in the downturn?
Some interesting data is presented about Canadian Ag in the November issue of Country Guide in an article by(quoting) George Brinkman. The comparison to US ag is noteworthy. Some of his observations-
American farm debt has increased by 20%since 1981, in Canada our farm debt has tripled.
Canadian farms have a debt to income ratio of 40 to 1, 4 to 6 times that of American farms.
Aggregate Canadian farm income is virtually unchanged since 1980 while debt has tripled.
American farms had an equity to income ratio of 26 to 1, in Ontario it was 293 to 1, meaning Ontario farmers had nearly 12 times as much invested per dollar earned as American farmers!
Stock market p/e ratio is normally 16 to 1, in the dot com bubble it reached 200-1, for Ontario farmland over the past four years it has been 1000-1.
His forecast, an increase in interest rates will burst the debt bubble causing a substantial downward adjustment in asset values, similar to the US housing bubble.
In fact, he is warning about the new wave of no down payment, interest loans- sound familiar.
In his words "Canadian farmers are failing, especially compared to our major export market". | |
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In the next downturn
