Rising Costs and High Interest Rates Threaten Quebec Farmers, Urgent Government Intervention Required

Tashi Farmilo

Quebec farmers are facing a dire situation as 11% of them contemplate shutting down their operations within the next year due to increasing costs and high interest rates, according to a survey conducted by the Union des producteurs agricoles (UPA) and revealed on April 12. The survey underscores the financial challenges that farmers in the region are currently grappling with, putting the sustainability of agriculture at risk.

UPA President Martin Caron expressed concerns,“The survey results confirm that agriculture is more impacted than other sectors by the harsh economic context,” said UPA president Martin Caron. “And the future is not bright for a growing number of farms, especially start-ups.” highlighting the disproportionate impact of the harsh economic climate on agriculture compared to other sectors. Caron emphasized the urgency of the situation, stating, "It is not too late, but there is an urgent need to act."

The survey findings revealed that 19% of respondents are currently facing financial difficulties, with 46% anticipating a further decline in their economic health over the next 12 months. Financial strain is evident, as 34% of farming operations stated that their revenue is insufficient to meet their financial obligations. Additionally, the same percentage anticipated ending the year in a deficit due to the impact of increased interest rates. Alarming concerns were raised by 41% of farms, fearing that the rise in interest rates could lead to a default.

The UPA highlighted that this challenging situation not only jeopardizes the sustainability of agriculture but also has implications for the entire food industry. "Fuel costs have been the primary driver of inflation, significantly impacting the expenses associated with shipping our products. As a result, we are being burdened with additional charges, forcing us to raise prices. Furthermore, the rising costs of seed due to increased fuel expenses for transportation have further exacerbated the situation. The cost of operating tractors and other equipment has also escalated. In essence, everything is experiencing price hikes, making it increasingly challenging for individuals, including myself as a sheep farmer in Pontiac, to make ends meet," expressed Shauna McKenna, highlighting the difficulties faced by farmers in the current economic climate.

Rae Becke, a horse farmer in the Pontiac region, expressed the difficulties faced by farmers, stating, "There is an exponential growth in terms of costs, especially fuel, but everything has gone up. It is a struggle. We run a horse business and the margins are already small. When all of your costs go up all at once, including minimum wage, it's hard when you are looking after staff too. Land costs are so high, so selling your land can actually be more profitable than working it. A farmer could potentially make more selling their land than they could earn in five years."

In response, the UPA has called for immediate government intervention. They are advocating for the establishment of emergency aid to support farms with high debt ratios, the enhancement of protection programs against rising interest rates during succession transfers, and an increase in the eligible financing amount for protection to $1 million.

Looking ahead, the survey also revealed that within the next year, 65% of farms intend to reduce or postpone investments in their operations. Additionally, 14% expressed their intention to downsize their businesses, further exacerbating the concerns surrounding the future of Quebec's farming sector.

Caron expressed his belief that the government is prepared to take action. However, he underscored the urgency of the situation and the importance of preventing further losses within the agricultural sector. Prompt measures are needed to address the financial challenges faced by Quebec farmers.