Canada's farmers could soon face a sub prime mortgage crisis, University of Guelph professor George Brinkman warns.
Farmer incomes have been dropping and some hold too much debt, concerning facts considering the widely anticipated continuation of interest rate increases, the CBC reports.
"It's very serious," Brinkman said. "In Ontario, for example, our debt-to-income ratio [from 2004 to 2008] is ... 17 times higher than [farmers in] the United States."
Figures from Ottawa predict the average farm net operating income will fall to just over $29,000 this year, a 15 per cent drop from averages recorded from 2004 to 2008. Collectively, farmers are expected to lose $164 million.
Interest charges, soaring land costs, lower demand and prices for livestock and crops and increased costs for seed and fertilizer are all factors Brinkman says are compounding the problem. Additionally, Canadian farm debt has more than tripled in the last few years while American farm debt, in comparison, has increased by only a third.
Stephen Vandervalk, vice-president of the Grain Growers of Canada, doesn't define the current situation as a crisis.
"I don't think we're quite there yet," he said. "If we're able to get a decent yield, I think we'll be OK this year," he said.