Farm income up in 2008: StatsCan

Not all provinces or farmers saw or felt a benefit, but Canada’s realized net farm income rose for a second consecutive year in 2008, reaching $3.6 billion, according to Statistics Canada.

Realized net income — the difference between a farmer’s cash receipts and operating expenses minus depreciation, plus income in kind — was $1.6 billion higher (up 79.2 per cent) than it was in 2007. The impact of high grain and oilseed prices more than offset large increases in operating expenses.

Realized net income increased in Quebec, Ontario, Saskatchewan and Alberta. The remaining provinces all showed decreases over 2007 levels, as increases in expenses outpaced gains in receipts, the federal statistics agency said in a release this week.

Market receipts (revenues from the sale of crops and livestock) increased 13.7 per cent to $41.7 billion in 2008. Crop receipts increased 24.2 per cent to $22.9 billion, while livestock receipts rose 3.1 per cent to $18.8 billion.

On average, grain and oilseed prices remained well above 2007 levels, as strong demand and tight global supplies continued to fuel prices throughout the first half of 2008. However, prices fell from their summertime highs as production increases in 2008 partially replenished global stocks.

Meanwhile, many livestock producers were adversely affected by higher feed costs and reduced prices resulting from the strong Canadian dollar, vis-a-vis its U.S. counterpart, in the first part of 2008. There was also uncertainty over the country-of-origin labelling (COOL) law in the U.S.

Revenue from hogs declined 2.8 per cent, the fourth consecutive annual decrease, as both price and quantity sold fell from 2007 levels. Market receipts for cattle and calves increased 2.8 per cent in 2008 as more cattle were exported into the United States; exports were up 13.2 per cent over 2007.

Receipts for supply-managed commodities (dairy, poultry and eggs) rose 5.7 per cent as increases in production costs pushed prices higher.

Higher operating costs

Overall, producers saw their operating costs increase 10.1 per cent to $37.2 billion in 2008, the strongest annual rate of growth in expenses since 1981.

Prices for fertilizer, machinery fuel, and feed rose throughout much of the year, and as a result, expenses increased in every province. These three inputs accounted for more than two-thirds of the increase in operating expenses.

Total net income (realized net income plus the value of inventory change) amounted to $6.6 billion in 2008, up $5.6 billion from 2007, despite declines in six provinces. Net income increased in Ontario, Manitoba, Saskatchewan and Alberta.

An increase in the farmer-owned inventories of crops was the primary factor behind the rise. Record yields for many crops boosted production in Ontario and the Prairie provinces.

Agriculture’s net value added rose by $5.9 billion to $15.5 billion in 2008. The main contributors were higher grain and oilseed prices and strong crop production.

NOTE: Preliminary farm income data for the previous calendar year are first released in May of each year (five months after the reference period), providing very timely information on the performance of the agriculture sector. Revised data are then released in November of each year, incorporating data received too late to be included in the first release.

Realized net income can vary widely from farm to farm because of several factors, including commodities, prices, weather and economies of scale. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income.

Financial data for 2008 collected at the individual farm business level using surveys and other administrative sources, will soon be tabulated and made available. These data will help explain differences in performance of various types and sizes of farms.