The agriculture industry turned in a good performance in 1995. An improved showing in the livestock sector, primarily dairy, chicken and eggs, resulted in total farm cash receipts reaching $63.6 million, up 1.1 percent over the previous year. Secondary food processing also grew last year. Sales of manufactured food products (excluding fish) reached $130.5 million, an increase of 5.7 percent, as companies continued to successfully market their products both inside the Province and abroad.

Livestock Sector

The termination of the Feed Freight Assistance (FFA) program at the end of 1995 resulted in sharp increases in feed prices. The FFA helped farmers defray transportation costs for the movement of western grains to Eastern Canada. As feed generally accounts for 50 to 70 percent of the cost of livestock production, the loss of the program has accentuated the need to lower feed costs by finding alternatives to western grain.

Industry stakeholders are currently working together to find lower cost feed sources for the livestock sector. Efforts currently ongoing in alternative feeds include grain variety trials, examination of fish and other animal waste products as livestock feed, and pasture management. Program results have been positive.

Studies have found that it is economically viable to grow grain in the Province. Farmers have grown barley, wheat and oats on a trial basis over the last three years with encouraging results. The estimated cost of locally growing, harvesting and storing grain is in the range of $131 to $164 per tonne. This compares very favourably with the cost of western grains delivered to the Province at between $233 to $266 per tonne.

Trade Agreements

An ongoing trade dispute between the U.S. and Canada surrounding the supply management system for dairy, chicken and egg products in Canada is expected this year. Under the General Agreement on Tariffs and Trade (GATT 1993) countries agreed to replace import quotas with a system of tariffs to be reduced between 1994 and 2001. The U.S. claims that the North American Free Trade Agreement should take precedence and does not permit the use of tariffs as agreed under GATT. Tariffs currently protect Canadian livestock producers from cheaper U.S. products. Upholding GATT would give local producers more time to develop less expensive sources of feed.

Outlook

The Provincial agriculture industry will face challenging times in 1996. The removal of the FFA program and high grain prices will put upward pressure on some livestock producers' operating expenses. Options to alleviate this pressure and increase overall efficiency in the livestock sector are currently being examined. On the other hand, crop production is expected to be at least on par with last year, and may even exhibit a marginal increase.