Farming operating revenues and expenses

Average farm operating expenses in Canada increased at more than twice the rate of revenues in 2003, resulting in the lowest operating margins for farmers since at least 1990, according to tax records.

Operating revenues per farm increased 2.0% from 2002 to $202,022 on average. At the same time, average operating expenses rose 5.0% to $177,174.

As a result, operating margins tumbled 2.4 cents to 12.3 cents per dollar of revenue.

The gain in average operating revenues was partly due to a 4.8% increase in average crop revenues. In the crop sector, sales gains in two commodities in particular played an important role: fruit (+17.2%) and vegetables (+14.8%). Sales of grains and oilseeds rose 4.5% on average, partly the result of a 31.5% increase in soybeans.

Total average livestock revenues declined 3.8% in 2003. Average cattle revenues fell 13.9%, mainly because of the ban on beef trade due to the detection of a single case of bovine spongiform encephalopathy (BSE) on May 20th, 2003. Most other average livestock revenues were up.

Average program payments and insurance proceeds rose 36.8%. In 2003, they accounted for 9.1% of average operating revenues, the largest share since 1992.

The biggest factor for higher operating expenses was an 11.4% increase in crop expenses, in particular a 15.4% increase in fertilizer costs. Heating fuel costs rose 31.8%, while insurance was up 15.6%.

Livestock expenses fell 2.6% in 2003, due to a 12.2% decline in cattle purchases.

Only 3 of the 11 major farm types posted higher operating margins in 2003. Canada's dairy farmers were the only farms with operating margins above 20 cents on average at 23.1 cents per dollar of revenue, down 0.3 cents from 2002.

Grain and oilseed farms ranked second at 19.2 cents per dollar of revenue, but they posted the biggest decline (-4.7 cents) from a year earlier. Beef cattle and feedlot operations reported a decline of 4.0 cents.

On the basis of sales, farms with operating revenues of between $250,000 and $499,999 had the highest operating margins, estimated at 18.2 cents, down 1.9 cents from 2002. Farms with operating revenues of between $100,000 and $249,999 recorded a margin of 17.6 cents, down 3.6 cents.

On average, farms with operating revenues below $250,000 reported falling revenues, while farms with operating revenues of $250,000 and over reported gains.

Note: The purpose of today's release is to provide Canadians with an insight into preliminary 2003 farm tax data, including changes from 2002 in operating revenues, expenses and margins by specific farm types and sales classes. Although final estimates will be released at the end of the first quarter of 2005, today's preliminary estimates help provide an early picture of Canadian farm operations in 2003.

These estimates cover unincorporated farms with gross operating revenues of $10,000 and over and corporations with total farm sales of $25,000 and over for which 50% or more of sales come from agricultural activities. These estimates exclude communal organizations such as Hutterite colonies. Operating margin is defined as one dollar minus operating expenses (before depreciation) per dollar of revenue.

Definitions, data sources and methods: survey number 3447.

For custom data requests, contact Client Services (1-800-465-1991; 613-951-5027). For more information, or to enquire about the concepts, methods or data quality of this release, contact Daniel Michaud (613-951-0701), Agriculture Division.