Farm cash receipts

Cumulative farm cash receipts for the first nine months of 2004 increased for the first time in three years, mainly because of higher crop revenues. Despite decreases in cattle and calf receipts, total livestock revenues improved amid higher returns for hogs and dairy products.

Farmers received $26.1 billion from all three sources (livestock and crop receipts and program payments) between January and September, up 6.4% from 2003. The total was 5.9% above the previous five-year average between 1999 and 2003.

Crop revenues jumped 13.4% to $10.7 billion, the biggest nine-month total since the record high in 1996. This year's total was 8.3% above the previous five-year average. Production rebounded in 2003 after two consecutive droughts in Western Canada that had sharply reduced crop levels and cut grain and oilseed farm inventories.

Livestock receipts increased a marginal 1.6% to $12.3 billion, although this was 2.6% below the previous five-year average. Lower cattle and calf receipts continued to plague producers still feeling the impact of the US border closure in the wake of the discovery of bovine spongiform encephalopathy (BSE).

Program payments climbed 4.2% to a record $3.1 billion. Additional assistance programs to help compensate for the BSE-related ban, coupled with record Net Income Stabilization Account (NISA) withdrawals, more than offset a decline in payments delivered through crop insurance.

Farm cash receipts are a measure of gross revenue for farm businesses. They do not account for expenses incurred by farmers. Cash receipts can vary widely from farm to farm because of several factors, including commodities, price and weather. In addition, the impact of the closure of the US border to Canadian cattle and beef on May 20, 2003 will continue to be reflected in farm financial statistics. The impact on other sectors of the economy, such as meat processing and transportation, is not covered here.

Provincially, total farm cash receipts rose in all provinces, except Prince Edward Island and British Columbia. Those with the most significant increases were Alberta (+14.9%), Nova Scotia (+9.4%) and Saskatchewan (+7.8%). The largest decline occurred in Prince Edward Island, where farm cash receipts fell 7.3% due to substantially lower potato receipts.

Higher deliveries, strong oilseeds prices boost crop receipts

After hitting their lowest level since 1994, crop receipts rebounded in the first nine months of 2004. Production of grains and oilseeds returned to more normal levels in 2003 following two consecutive droughts in Western Canada. The increase in crop revenues largely reflects the 2003 crop. The effects of the 2004 harvest, which was seriously delayed in many parts of the country, will continue to be reflected in revenues. (For more information see The Daily, October 6, 2004: September Estimate of Principal Field Crops).

Substantially higher deliveries for most major crops between January and June 2004, stronger oilseeds prices and higher Canadian Wheat Board (CWB) payments contributed to the rise in overall crop revenues.

Except for oilseeds and corn, average prices for the major grains were lower than levels last year as a result of increased supply. Canadian oilseed prices were supported by increased world oilseed consumption, and by both low soybean supplies and strong prices in the United States.

Farmers received $1.7 billion between January and September for canola, up 52.4% from the same period in 2003. Deliveries increased 42.2% from last year's level, while prices rose steadily in the first half of 2004. Canola production increased by over 50% in 2003, as both harvested area and yield rose.

Receipts for wheat (excluding durum) increased 25.4% to $1.8 billion in the wake of both higher marketings and CWB payments. Prices were lower than last year's level due to higher production in most major exporting countries.

Revenue from horticulture crops, which include fruits, vegetables, and the floriculture, nursery and sod industries, was up 3.5% to $3.1 billion. These crops accounted for more than 25% of total crop receipts.

Hogs drive growth in livestock receipts

Hog producers led the growth in livestock revenues as their receipts rose 20.6% in the first nine months of 2004 to a record $3.1 billion. This was due mostly to a 20.0% increase in receipts for hogs sold for domestic slaughter. Hog prices strengthened because of robust exports and strong consumer demand.

Farmers exported 6.3 million hogs between January and September, which brought them a record $500 million. This level was 24.6% above the same nine months of last year, and 71.4% above the average for the 10-year period between 1994 and 2003. Hog exports picked up after the United States closed the border to Canadian cattle in May 2003. (For more information see The Daily, October 28, 2004, Hog inventories).

On the other hand, revenue from cattle and calves fell 11.0% to $3.4 billion, the lowest level since 1995, largely because of a 15.8% decline in prices amid higher marketings. The cattle sector's receipts remained 30.2% below the previous five-year average.

As the US border remains closed to live cattle and calves, producers have responded by sending more cattle for domestic slaughter. The number of slaughter cattle marketed between January and September of 2004 climbed 23.4% to a record 2.9 million head.

Slaughter receipts rose 11.3% from the previous year, as the increase in slaughter more than compensated for a 11.0% decline in price. Farm cash receipts for slaughter cattle between January and September were 8.2% below the five-year average. As of mid-September 2003, Canadian boneless beef from animals younger than 30 months was allowed into the United States under a permit process.

Receipts from international exports in live cattle and calves were zero in 2004, down from $590 million in the first nine months of 2003. Prior to this trade restriction, revenues through the first nine months of 2002 from international sales of cattle and calves accounted for 23.1% of total revenues to Canadian cattle and calf producers.

On the supply-managed side, receipts for dairy products, chicken and eggs all increased, while revenues from turkey declined despite a 4.5% rise in price. Most of the decline in turkey receipts occurred in British Columbia. This province also saw chicken receipts fall by a quarter due to the avian flu situation, which caused a substantial number of birds to be destroyed.

Receipts for milk and cream rose 1.9% on the strength of a 2.1% increase in total marketings.

In general, supply-managed livestock commodities accounted for over 40% of total livestock revenue in the first nine months of 2004.

Program payments continue record pace

Program payments continued their record-setting pace in 2004, rising 4.2% above the record set in 2003. They increased by almost a billion dollars over the previous five-year average.

Two factors were behind this increase: the additional assistance programs designed to help compensate for the effects of the BSE-related ban and the record withdrawals from NISA, as producers wind down their accounts.

Canadian farmers received over $500 million through the BSE-related programs in the first nine months of 2004. The largest contributor was the Transitional Industry Support Program (TISP) which delivered more than $200 million. The TISP was designed to provide assistance to producers in meeting the financial challenges resulting from BSE.

Withdrawals from the government portion of NISA accounts reached record levels in the first three quarters of 2004. Farmers withdrew $819 million from their government accounts, a 51.9% increase over last year's withdrawals and more than double the previous five-year average of $380 million.

The new Canadian Agricultural Income Stabilization (CAIS) program is replacing NISA. Rules to wind down NISA accounts require producers to withdraw all their funds by March 31, 2009. They must withdraw a minimum of 20% annually.

Crop insurance delivered $526 million in the first nine months of 2004, a $722-million decline from the record payments during the same period in 2003. Higher levels of crop insurance in 2003 were the result of droughts in Western Canada in 2001 and 2002.

Available on CANSIM: table 002-0002.

Definitions, data sources and methods: survey number 3473.

For more information or to enquire about the concepts, methods or data quality of this release, contact Rita Athwal (613-951-5022; rita.athwal@statcan.gc.ca) or Paul Murray (613-951-0065; paul.murray@statcan.gc.ca), Agriculture Division.