Farm cash receipts

Higher revenues for crops and hogs pushed farm cash receipts up for the first time in three years in 2004. In total, farmers received $36.8 billion from all three sources (livestock and crop receipts and program payments), a 7.5% increase from 2003.

The 2004 total was about $450 million higher than the previous record of $36.3 billion set in 2001. However, there was a major difference in the factors behind the high points.

In 2001, the main engines of growth were livestock receipts, driven by strong cattle and hog markets, and program payments. Crop receipts grew only modestly as producers were hit by adverse weather conditions.

In 2004, however, the driving force was crop revenues, which increased 11.4% to $14.7 billion, surpassing the previous record set two years earlier. This total was 8.6% higher than the previous five-year average between 1999 and 2003.

Livestock receipts rose 6.3% to $17.2 billion in 2004, but this was just marginally higher than the previous five-year average of $17.1 billion. While receipts for hog producers hit a record high, revenues from cattle and calves fell to their lowest level since 1996 as the industry's BSE-related problems continued.

Farmers received $4.9 billion from program payments in 2004, up $37 million from the previous record in 2003.

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.

Farm cash receipts rose in all provinces except Prince Edward Island where revenues fell 2.0% due to a substantial decline in potato prices.

Provinces with the most significant gains in farm cash receipts were Alberta, Manitoba, Nova Scotia and Saskatchewan.

Crop receipts rebound to record high

Crop receipts in 2004 staged a solid rebound from one of the lowest levels in a decade. Production of grains and oilseeds returned to more normal levels in 2003 following two consecutive droughts in Western Canada (2001 and 2002).

Two main factors contributed to this gain: substantially higher deliveries for most major crops between January and June 2004; and higher Canadian Wheat Board (CWB) payments.

The increase in crop revenues was due largely to the 2003 crop. Revenues for the major grains and oilseeds rose in the first half of 2004, then fell after the harvest, as both prices and marketings decreased.

The impact of the 2004 harvest season, which was seriously delayed in many parts of the country, will continue to be reflected in revenues. (For more information see The Daily, December 8, 2004: November Estimate of the Principal Field Crops).

Receipts for wheat (excluding durum) increased 33.3% to $2.4 billion in the wake of both higher CWB payments and marketings. Prices were lower than 2003 levels due to higher production in most major exporting countries.

Farmers received $2.3 billion for canola in 2004, up 28.3% from 2003. Deliveries in 2004 increased 27.3%, while prices rose steadily in the first half of the year. However, a record US soybean crop, expectations of a bumper South American soybean crop and a rising Canadian dollar has prompted a price slide for both oilseeds that started last spring. The overall average price increase for the year was marginal. Canola production jumped over 50% in 2003 and grew again in 2004 due to increased harvested area and yield.

Revenue from horticulture crops, which include fruits, vegetables, and the floriculture, nursery and sod industries, was up 4.3% to $4.1 billion. This sector now accounts for nearly 28% of total crop receipts, compared with less than 20% during the mid-1990s.

Hogs lead growth in livestock receipts

Hog producers led the growth in livestock revenues as their 2004 receipts reached a record $4.3 billion, up 25.1% from 2003. This jump was due mainly to a 25.6% growth in revenue from domestic slaughter. Hog prices strengthened throughout 2004 as a result of robust exports and strong domestic demand.

Farmers exported 8.6 million hogs in 2004, which generated a record $685 million in receipts. This level was 22.3% higher than the previous year and 73.8% higher than the previous 10-year average between 1994 and 2003.

Despite a preliminary ruling in October by the US Department of Commerce that Canadian hog exports are being unfairly marketed and causing financial injury to US producers, hog exports continued to grow.

Revenues from cattle and calves remained flat at $5.1 billion, the lowest level since 1996. Despite an increase in marketings, cattle and calf receipts were 23.9% below the previous five-year average. Prices plummeted with the discovery of BSE during the spring of 2003, and despite some gains, the average 2004 price remained 12.6% below that of 2003.

Since the US border remains closed to live cattle and calves, producers have responded by sending more animals to domestic slaughter. As a result, the number of slaughter cattle and calves marketed in 2004 climbed 26.2% to a record 4.4 million head. (For more information, see The Daily, February 17, 2005: Livestock estimates.)

Revenues for slaughter cattle rose 19.7% from 2003, as the marked increase in slaughter more than compensated for a 7.3% decline in price. Despite the increase in the volume of cattle slaughter, farm cash receipts remained 0.9% 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 special permit process.

Receipts from international trade in live cattle and calves tumbled to zero in 2004 from the $590 million posted in 2003. In 2002, the last full year of unrestricted trade, sales from international commerce in cattle and calves accounted for almost a quarter of total revenues to Canadian cattle and calf producers.

Supply-managed commodities accounted for just over 40% of total livestock revenues in 2004. Receipts for dairy products and poultry increased. However, in British Columbia, poultry and egg receipts fell because of the avian flu outbreak, which resulted in a substantial number of birds being destroyed. Producers did not begin to replenish their flocks until the latter half of the year.

Program payments remained stable

After rising substantially in 2003, program payments grew a marginal 0.8% in 2004, setting a new record. Program payments remained well above the previous five-year average of $3.4 billion.

Crop insurance delivered $885 million in 2004, a $921-million decline from the record payments in 2003. Higher levels of crop insurance in 2003 were the result of two consecutive years of drought in Western Canada in 2001 and 2002.

Canadian farmers received over $1.1 billion through the BSE-related programs in 2004. The largest contributor was the Transitional Industry Support Program (TISP) which delivered more than $806 million. TISP was designed to provide assistance to producers in meeting the financial challenges resulting from the market impacts of BSE.

Withdrawals from the government portion of the Net Income Stabilization Account (NISA) reached record levels in 2004. Farmers withdrew $934 million from their government accounts, a 29.2% increase over 2003 withdrawals and nearly double the previous five-year average of $536 million. The majority of this increase may be attributed to the scheduled completion of the NISA program. 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.

The Canadian Agricultural Income Stabilization (CAIS) program implemented in 2004 delivered $777 million. The CAIS program was designed to provide assistance to producers who have experienced a loss of income as a result of BSE or other factors.

Payments under the income disaster programs declined 46.1% to $237 million in 2004 as the Canadian Farm Income Program neared completion.

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.