Potential impact of mad cow disease on farm family income

by 5m Editor
18 June 2004, at 12:00am

CANADA - The discovery of one case of bovine spongiform encephalopathy (BSE), or mad cow disease, a year ago in Alberta, and the subsequent international trade ban, have had a severe financial impact on Canadian farm families who have a beef cattle operation.

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In 2003, Canadian farm cash receipts from cattle and calves were estimated at $5.2 billion, a 33% plunge from 2002.

This new report attempts to assess the potential short-term financial effect of the BSE situation on Canadian farm family income using data from 2000. It assesses, in particular, the potential financial impact of BSE for families who have a single unincorporated beef cattle operation, using the scenario of annual cattle and calf revenues per farm declining 35%.

The adjustment made to operating costs is that of an estimated 20% reduction in the replacement cost of beef animals as fewer head were expected to move into feedlot operations. To assess the size of the financial impact of BSE on beef cattle farmers, no other adjustments were assumed in the evaluated scenario. For instance, farm practices, off-farm income and government support payments were assumed constant.

Given these assumptions, families with a single unincorporated beef cattle operation would have lost an average of $20,000 due to the BSE situation. Average total income for families with beef cattle operations in 2000 would have declined by 33% from $60,000 to $40,000.

The farm families hardest hit from the BSE fallout would be those operating large intensive cattle operations.

Overall, 27% of families operating a single unincorporated beef cattle operation would have earned a total family income below $20,000 under the noted BSE scenario, up from the original 14% that had a family income below $20,000.

The beef cattle sector is important to the Canadian agricultural industry and to the overall Canadian economy. One in three Canadian farm families is now involved in a single unincorporated beef cattle operation that derives at least half of its agricultural sales from the sale of beef cattle and calves.

Farm cash receipts from cattle and calves totalled nearly $8 billion, or 21% of the $36 billion in farm cash receipts earned in 2002.

The study shows estimates of the impact of cattle exports on the Canadian economy, using Statistics Canada's national input-output model. For each $100 million in exports by the cattle sector, an estimated $80 million is added to gross domestic product at market prices, $228 million is generated in total output, $41 million is added to labour income, and 3,000 jobs are created.

The Agriculture and rural working paper no. 69, entitled Canada's beef cattle sector and the impact of BSE on farm family income 2000-2003 (21-601-MIE2004069, free)

Source: Statistics Canada - 18th June 2004

5m Editor