From Statistics Canada
Realized net farm income totalled $8.3 billion in 2015, its fifth increase in six years. The 10.7% increase in 2015 followed a 19.3% advance in 2014.
Realized net income is the difference between a farmer’s cash receipts and operating expenses, minus depreciation, plus income in kind.
The growth in receipts exceeded the small increase in operating expenses, leading to the rise in realized net income.
The national increase was not widespread as Newfoundland and Labrador, Saskatchewan, Alberta and British Columbia were the only provinces to record gains in realized net income.
Annual farm cash receipts rise for the fifth consecutive year
Farm cash receipts, which include market receipts from crop and livestock sales as well as program payments, rose 3.2% to $59.8 billion in 2015. This followed a 4.8% gain in 2014 and marks the fifth consecutive annual increase. Receipts rose in every province except Prince Edward Island, Quebec and Manitoba.
Market receipts (revenues from the sale of crops and livestock) increased 3.3% to $57.6 billion in 2015. A 6.1% gain in crop receipts pushed market receipts higher, as there was little change in livestock receipts.
Strong export demand and record levels of production contributed to lentil receipts more than doubling (+110.5%) to $2.3 billion. Poor growing conditions in India, where lentils are a staple in the diet, fueled demand in Canada, contributing to a 58.0% increase in prices and a 33.2% gain in marketings.
Canadian farm-gate prices for most grains and oilseeds were up from 2014, despite the growth of global stocks of grains and oilseeds putting downward pressure on world prices, which are expressed in US dollars. The depreciation of the Canadian dollar relative to the US dollar was sufficiently strong to offset the negative impact of higher global stocks on the prices received by Canadian producers.
Both prices (+3.5%) and marketings (+6.2%) were up as canola receipts increased 9.9% to $8.1 billion in 2015. A 5.8% price rise for wheat (excluding durum) pushed receipts 4.3% higher.
Livestock receipts were virtually unchanged from 2014 at $25.7 billion. Hog receipts fell 17.0% in 2015 to $4.2 billion, as prices were down 21.9% in the wake of increased North American inventories. Offsetting this decline was a 7.8% gain in cattle receipts. Strong prices in the first part of the year translated into an annual 20.8% gain in prices that more than compensated for a 10.7% drop in marketings.
Also providing support to livestock receipts was a 7.0% increase in egg receipts, as production rose 5.1%. Overall, receipts for producers in the supply-managed sectors (dairy, poultry and eggs) rose 0.4% to $9.8 billion. Dairy receipts were the exception, edging down 0.7%.
A 42.4% increase in crop insurance payments offset declines in AgriStability and provincial stabilization outlays, leaving total program payments up 1.2%.
Lower fuel costs temper farm expense increase
Total operating expenses (after rebates) rose 1.6% from a year earlier to $44.6 billion in 2015. This was the smallest increase since 2010.
A 20.0% drop in machinery fuel expenses almost offset small increases in most other expense items. Machinery fuel prices fell 26.8% as measured by the Farm Input Price Index.
The only notable increase was a 14.6% gain in livestock purchases, a result of higher cattle prices.
Total farm expenses, which include total operating expenses and depreciation, rose 2.1% to $51.6 billion in 2015. Higher prices for machinery contributed to a 5.3% gain in depreciation expenses.
Total farm expenses increased in every province, with Alberta (+2.9%) posting the largest gain.
Total net income
Total net income rose $3.5 billion to $8.3 billion in 2015, following a $7.6 billion decline in 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.
The value of inventory change had a positive impact on the change in total net income. The overall drop in on-farm stocks of crops was smaller than in 2014, as farm inventories of certain crops rose in 2015. Cattle and calf inventories edged up in 2015, after declining in 2014.
Total net income rose in every province except Prince Edward Island, Nova Scotia and Quebec. Saskatchewan (+$2.0 billion) recorded the largest increase.