Net farm income

Net cash income - the difference between a farmer's cash receipts and operating expenses - reached $8.7 billion in 2001. Despite the sharply higher cost of inputs such as feed and fertilizer, this increase was mainly due to a booming livestock sector and marginal growth in crop receipts, as farmers substantially reduced their grain and oilseed stocks.

Farmers' net cash income rose 26.7% from 2000, as both cash receipts and operating expenses hit record highs. Net cash income increased for the second straight year, rebounding from annual declines during the late 1990s.

Net cash income can vary widely from one farm to another because of factors such as commodities produced, prices and weather. This is especially true for crop producers, who have been hit hard by low prices, as well as by drought or extremely wet conditions in many areas.

Strong livestock sector drives up net cash income in 2001

Cash receipts reached $36.3 billion in 2001, up 9.8% from 2000. Livestock receipts rose 10.9%, as a record number of cattle, pigs, chickens and eggs were sold at higher prices. Program payments jumped 32.6%, the result of higher payments delivered through crop insurance and income disaster programs coupled with the additional federal and provincial support that was delivered through one-time emergency assistance programs.

Crop receipts grew 3.4% to $13.6 billion, following three years of declines. However, they remained 1.1% below the previous five-year average (1996 to 2000), as lower deliveries for some major grains and oilseeds during the last half of 2001 offset higher prices. Farmers drew heavily on their crop inventories to support sales in 2001, as adverse weather conditions substantially reduced production.

Operating expenses rose 5.3% to $27.6 billion in 2001. Rising feed and fertilizer prices contributed most of this increase. Tight supplies of feed grains, combined with strong demand for beef, pork and chicken, resulted in a 13.8% hike in commercial feed expenses and a 5.2% rise in livestock and poultry purchases.

Fertilizer expenses jumped 13.4% as a result of higher prices. Increases in natural gas prices, a major input in fertilizer production, contributed to this and to a 25.5% hike in heating fuel expenses.

Declining interest rates moderated the increase in farm operating expenses. Interest expenses, which accounted for almost one-tenth of total expenses, decreased 3.8% in 2001.

Total net income highest since 1996

Total net income rose 21.9% in 2001, with the increase in net cash income more than offsetting a large decline in the total value of inventory. Total net income measures agriculture economic production by adjusting net cash income for the value of inventory change, depreciation and income in kind. Although this was the largest increase since 1996 and 15.1% above the five-year average, the 2001 level of $3.5 billion was nevertheless 22.2% below its 1996 record.

The poor growing conditions in many parts of the Prairies and the rest of Canada contributed to very low levels of farm crop inventories at the end of 2001. Lower stocks of all major grains and oilseeds, except corn, reduced the value of on-farm crop inventories by $1.1 billion. Adverse weather in many areas of the Prairies reduced crop yields and forced farmers to use grain as feed earlier than usual as good pastureland quickly became scarce. As a result, by the end of 2001, on-farm inventories of grains and oilseeds were at their year-end lowest since the drought-reduced levels in western Canada in 1988.

Available on CANSIM: tables 002-0003, 002-0005, 002-0007 to 002-0009, 002-0012and 003-0025.

Information on methods and data quality available in the Integrated Meta Data Base: survey numbers, including related surveys, 3471, 3472 and 3473.

The following free electronic publications will be released in January 2003: Net farm income - Agriculture economic statistics (21-010-XIE), Farm cash receipts - Agriculture economic statistics (21-011-XIE), Farm operating expenses and depreciation charges - Agriculture economic statistics (21-012-XIE), Value of farm capital - Agriculture economic statistics (21-013-XIE), Farm debt outstanding - Agriculture economic statistics (21-014-XIE) and Direct payments to producers - Agriculture economic statistics (21-015-XIE).

For more information, or to enquire about the concepts, methods or data quality of this release, contact Bernie Rosien (613-951-2441; bernie.rosien@statcan.gc.ca), Agriculture Division.