Farm cash receipts

First-quarter market cash receipts for Canadian farmers fell to their lowest quarterly level in a decade, in the wake of a substantial decline in revenue from crops and a marginal drop in livestock receipts.

Market receipts, or revenues from the sale of crops and livestock, fell to $7.5 billion in the first quarter of 2006, down 3.4% from the same period last year.

Crop producers continued to contend with low commodity prices as their revenue tumbled 8.0% to $3.0 billion. This level was 11.3% below the previous five-year average between 2001 and 2005. Abundant world grain supplies and a strong Canadian dollar continue to depress prices.

At the same time, livestock receipts edged down 0.1% to $4.5 billion, with a decline in hog receipts offsetting gains in the cattle and calf sector. This level was at par with the previous five-year average, a period which included the impact of the bovine spongiform encephalopathy (BSE) crises that closed the border to the United States.

Farmers received $1.6 billion in program payments during the first quarter, down 2.6% from the same three months last year. However, the amount disbursed to farmers through various programs was $413 million above the 2001 to 2005 year average.

Including these payments, total farm revenue for January to March reached $9.1 billion, down 3.3%. Overall, total receipts for the first quarter were 0.3% above the previous five-year average.

Provincially, farm cash revenue declined in Ontario and Quebec, mainly the result of lower hog receipts, and in Saskatchewan and Manitoba, where grain and oilseed were responsible.

The largest increase in total receipts (+14.7%) occurred in Prince Edward Island as potato prices rebounded.

Farm cash receipts provide 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. For the most recent information about net farm income in 2005, consult the preceding release in today's Daily.

Crop receipts fall to lowest level since 1993 

Abundant world supplies and the appreciation of the Canadian dollar continued to plague grain and oilseed prices.

Revenues from wheat (excluding durum) dropped 17.1% to $344 million, the result of lower deliveries and Canadian Wheat Board (CWB) payments. Prices rose 4.9% from the 12-year low received last year. The increase in price was mainly due to an improvement in the quality of the 2005 crop.

Barley receipts fell 33.8% to $88 million due to a combination of lower deliveries, prices and CWB payments. Barley production dropped 5.3% last year as producers planted fewer acres.

Producers deferred much less revenue from the 2005 harvest into 2006 due to historical low grain and oilseed prices and increased input costs. As a result, liquidation of deferments fell around 40% in the first quarter of 2006.

On the other hand, higher canola deliveries lessened the decline in overall crop receipts. Record canola production, it was up 25.0%, and record on-farm stocks at the beginning of this crop year supported a 48.9% jump in deliveries in the first quarter of 2006. Revenue from canola rose 38.3% despite a 7.1% drop in prices. Canola receipts hit $571 million, almost 30% higher than the previous five-year average.

Livestock receipts down slightly despite improvements in cattle, calf revenue

Livestock receipts slipped in the first quarter of 2006 despite improvements in revenues from cattle and calves. Cattle and calf receipts rose 20.9% on the strength of a 12.4% gain in marketings and a 7.5% rise in prices. Overall livestock receipts were constrained by a decline in hog revenues.

The cattle sector continues to regain some of the ground lost during the 26 months of BSE-related trade restrictions. While revenues from the export of live cattle and calves hit $398 million in the first quarter of 2006, they still remained marginally below the same period in 2003, the last full quarter of trade prior to the trade embargo.

Despite the year-over-year improvement in cattle and calf receipts, prices continue to languish below historic averages. The average price for cattle sold for slaughter in Canada through the first three months of 2006 was 16.9% below the five-year average and 10.0% below the equivalent 10-year average.

Revenues from slaughter cattle, representing 56.9% of total cattle and calf receipts, declined 13.6%. Both marketings (-10.7%) and price (-3.2%) were below levels of a year ago. In contrast, the price for feeder cattle rose 15.5%, causing revenues from inter-provincial trade to rise 14.8%.

Cash receipts for hog producers declined 23.2%, as prices tumbled 20.7% in the first quarter from the eight-year high posted last year. Hog receipts were also hit by a 3.1% decline in marketings.

Hog slaughter prices declined in each successive month from September 2005 through February 2006 before posting a marginal increase in March 2006. The downward pressure on prices has come from large North American supplies and a stronger Canadian dollar.

On the supply-managed side, receipts from dairy products, eggs and turkeys all rose, while revenues from chickens declined. Receipts from chickens were 8.3% lower as prices declined 9.9% in the first quarter. Supply-managed commodities accounted for about 40% of total livestock receipts.

Program payments decline from record levels

First-quarter program payments fell 2.6% from the 2005 record level of $1.6 billion, despite strong Canadian Agricultural Income Stabilization (CAIS) payments and the introduction of the new national Grains and Oilseed Payment Program (GOPP).

The GOPP was introduced on February 6, 2006 to provide direct assistance to producers of grains, oilseeds and special crops. More than half of the fund, over $400 million, was distributed to farmers at the end of the first quarter.

The CAIS program delivered $500 million in the first quarter, down $70 million from the same period in 2005. The CAIS program was designed to responds to the needs of producers who experience income loss during times of severe crises (such as BSE).

Crop insurance payments declined 30.6% to $263 million. Withdrawals from the government portion of the Net Income Stabilization Account amounted to $276 million, down 13.5% from the same quarter in 2005, as the program continued to wind down.

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 Jesus Dominguez (613-951-1747; jesus.dominguez@statcan.gc.ca) or Estelle Perrault (613-951-2448), Agriculture Division.