Legalization lifts Canada’s net farm income in 2019

A significant year-over-year increase Canada booked last year in realized net farm income rests mainly on 2019’s status as the country’s first full year in the recreational cannabis market.

Statistics Canada on Tuesday released full-year data on farm income, pegging Canada’s realized net farm income for 2019 at $4.9 billion — a 10.4 per cent increase from 2018 and the first such increase in three years.

The increase in 2019 also comes in the wake of a 37.4 per cent decline in 2018 from 2017 — in that case due to “sharply higher” input costs and lower canola receipts, the federal statistics agency said.

For 2019 over 2018, higher cannabis and livestock receipts and increased program payments “just offset” the rise in overall operating expenses, StatsCan said.

A 3.9 per cent increase in crop receipts, at $36.6 billion, was due mainly to the $1.7 billion increase in licensed cannabis producer receipts compared to 2018 — the year in which recreational cannabis was legalized in mid-October.

Growth in cannabis receipts in Ontario and Alberta alone accounted for 56.5 per cent of the national increase, StatsCan said.

Leaving cannabis aside, crop revenues at the national level would have declined 1.1 per cent, StatsCan said. That decline came mainly from drops of 7.4 per cent and 17.7 per cent in canola and soybean revenue, due to China’s import restrictions on Canadian canola seed and reduced soymeal demand from China and other countries due to swine fever.

Canada’s durum wheat sales, meanwhile, were up 22.5 per cent in 2019 from 2018, as “production shortfalls elsewhere in the world led to increased export demand for high-quality Canadian durum,” StatsCan said.

In Canada’s livestock sector, hog producers saw an 11.6 per cent lift in revenue in 2019 over 2018 on higher prices and marketings, even despite China’s block on Canadian pork imports from June into November.

Cattle revenue was 3.3 per cent on the year on increased marketings, with “strong global demand for beef and lower end-of-year cattle inventories in the United States,” StatsCan said. Among the supply-managed commodities, increased receipts were seen in dairy (up 5.1 per cent), chicken (4.7 per cent) and eggs (six per cent).

Program payments in 2019 were up 40.6 per cent on the year, at $3.1 billion, including a 57.7 per cent increase in crop insurance payments due to “adverse” crop conditions. The first instalment ($293 million) from the federal Dairy Direct Payment Program was also released in 2019.

Increases in realized net income in 2019 were shown in Alberta ( up $425 million), Quebec (up $373 million), British Columbia (up $102 million), New Brunswick (up $41 million) and Prince Edward Island (up $20 million).

“Reduced” receipts from oilseeds — and smaller increases in cannabis receipts — led Saskatchewan to a $311 million decline from 2018, while Manitoba booked a $179 million decrease, StatsCan said.

Farm operating expenses, after rebates, were up 5.7 per cent on the year, at $53.1 billion. Factors in that increase included interest expenses (up 16 per cent), cash wages (up 9.2 per cent) and fertilizer (up 7.1 per cent). Increased cannabis production alone accounted for just under half the increase in operating expenses overall.

Total net income — that is, realized net income adjusted for changes in farmer-owned inventories of crops and livestock — came out at $3.9 billion in 2019, up $82 million from the previous year. Increases in total net income in Alberta and Quebec “partially offset” declines in Saskatchewan and Manitoba, StatsCan said.

First-quarter receipts in

StatsCan on Tuesday separately released new data on farm cash receipts for the first quarter of 2020, reporting a 5.5 per cent increase from the year-earlier period at $16.9 billion.

Again, increased crop receipts in Q1 2020 were mainly in cannabis, at $1 billion alone. Canola receipts were also up on increased marketings and lentil receipts rose on rising exports and higher prices, but without cannabis, crop receipts were down 4.7 per cent.

In the livestock sector, hog and dairy receipts showed gains at 14.4 per cent and 5.9 per cent respectively. Receipts for cattle and calves combined were down three per cent.

Farm program payments, at $991.7 million, were up 42.4 per cent from the year-earlier Q1, again mainly from crop insurance and the Dairy Direct Payment Program. — Glacier FarmMedia Network