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Net Farm Income Up Nationally; Down In Ontario

on June 27 | in Ag News | by | with No Comments

From Statistics Canada

Realized net farm income rose 9.2% from 2014 to $8.1 billion in 2015, following a 19.1% rise the previous year. The gain in 2015 was the fifth in six years.

Realized net income is the difference between a farmer’s cash receipts and operating expenses, minus depreciation, plus income in kind.

A slight increase in farm cash receipts outpaced a small rise in operating expenses, resulting in a gain in realized net income in 2015.

While there was an increase at the national level, realized net income rose in only four provinces: Newfoundland and Labrador, Saskatchewan, Alberta and British Columbia.

Ontario’s realized net farm income dropped to $1 billion from $1.2 billion, due in part to an increase in operating expenses.

Farm cash receipts

Farm cash receipts, which include market receipts from crop and livestock sales as well as program payments, rose 2.7% to $59.4 billion in 2015, the fifth consecutive annual increase.

Market receipts were up 2.7% to $57.3 billion in 2015, as gains in crop receipts more than offset a small decline in livestock revenue.

Crop receipts totalled $31.6 billion in 2015, a 5.2% increase. This followed a 3.0% decrease in 2014.

Lentils, a crop grown primarily in Saskatchewan, contributed the most to the growth in crop receipts in 2015. Lentil receipts (+110.1%) more than doubled as prices increased 57.6%. Marketings were up 33.3%, as production hit a record level. An increase in exports, largely to India, contributed to the rise in receipts.

The depreciation of the Canadian dollar relative to the US dollar supported the prices received by Canadian producers. At the same time, increased global stocks of grains and oilseeds put downward pressure on world prices expressed in US dollars in 2015. However, Canadian farm-gate prices for most grains and oilseeds were up from 2014.

Canola receipts increased 8.5% from 2014 to $8.0 billion in 2015, as both prices (+3.5%) and marketings (+4.8%) rose. Export demand continued to show strength, while increased crushing capacity boosted domestic use.

Wheat receipts, excluding durum, rose 5.1% from the previous year to $5.1 billion in 2015, as a result of higher prices.

Although the price of soybeans fell 7.9%, receipts were up 4.3% on the strength of a 13.3% gain in marketings.

Livestock receipts amounted to $25.7 billion in 2015, down 0.2% from the previous year, the first decrease since 2009. This followed a 19.3% increase in 2014.

Lower hog prices pushed receipts down 17.0% to $4.2 billion in 2015, as increased inventories in North America exerted downward pressure on prices.

In contrast, cattle and calf receipts increased for the sixth consecutive year, rising 7.0% to $10.5 billion. A 20.4% gain in prices more than offset an 11.1% drop in marketings. Tight supplies, especially in the first half of 2015, continued to put upward pressure on prices.

Receipts for producers in the supply-managed sectors (dairy, poultry and eggs) edged up 0.3% to $9.8 billion, mainly as a result of higher egg receipts (+5.5%).

Farm expenses

Total operating expenses (after rebates) were $44.4 billion in 2015, up slightly (+1.2%) from $43.9 billion in 2014. This was the smallest increase since 2010, when operating expenses fell 2.1%.

A 22.3% drop in machinery fuel expenses moderated the rise in expenses, as only three other expense items recorded decreases. According to the Farm Input Price Index, machinery fuel prices fell 26.8% in 2015.

Higher cattle prices contributed to a 14.1% increase in livestock purchases, which, together with unexceptional increases for most other expense items, were enough to offset the small number of decreases in operating expenses.

When depreciation charges are included, total farm expenses increased 1.7% to $51.3 billion in 2015. Depreciation costs rose 5.4%, as rising machinery prices pushed up machinery depreciation expenses (+7.1%).

Total farm expenses increased in every province, with Alberta (+3.0%) recording the largest rise.

Total net income

Total net income was $6.8 billion in 2015, up $2.1 billion from 2014.

Total net income is realized net income adjusted for changes in farmer-owned inventories of crops and livestock. It represents the return to owner’s equity, unpaid farm labour, management and risk.

Total net income rose in all provinces except Prince Edward Island, Nova Scotia, Quebec and Ontario. Saskatchewan (+$1.3 billion) recorded the largest increase, as a result of the strong market for lentils.

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