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Balance sheet of the agricultural sector
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Farm sector equity in Canada increased 2.7% in 2006 to $195.2 billion, as assets rose more rapidly than liabilities. The value of farm real estate continued the steady growth started in 1988. It advanced 2.9% in 2006 and was an important contributor to the increase in assets.
Farm liabilities at the end of 2006 reached $48.0 billion, up 4.4% from 2005, the 13th consecutive annual rise. Current liabilities advanced 1.5%, while long-term liabilities recorded an annual increase of 5.3%.
The debt-to-asset ratio progressed for the 11th consecutive year, rising to 19.7% in 2006. This ratio, which measures the dependence of farm businesses on debt, reached a new record for the 1981 to 2006 period, slightly above the 19.5% reached in 2005. The lowest ratio occurred in 1981 at 12.4%.
After reaching its lowest level in 2005 since 1981, the current assets to current liabilities ratio edged up in 2006 to 1.991, compared to 1.962 in 2005. The lower levels recorded in the past four years meant that operators within the agriculture sector had a lower ability to pay short-term debts, compared to the 1981 to 2002 period.
The interest coverage ratio, which indicates the ability to pay interest charges and to protect creditors from interest payment default, decreased to 1.725 in 2006, the second consecutive decline after the eight-year high of 3.434 in 2004. The 2006 level remained below the 10-year average of 2.735 (1996 to 2005).
Return on equity fell to 1.0% in 2006. This was likewise a second consecutive decrease following an eight-year high in 2004 (3.0%). The 2006 level remained below the 10-year average of 2.2%.
As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of the balance sheet of the agricultural sector at December 31 and other data contained in the Agriculture Economic Statistics series will be revised, where necessary. These revisions will be announced in a future release of the series in The Daily.
Available on CANSIM: table 002-0020.
Definitions, data sources and methods: survey number 5029.
The publication Balance Sheet of the Agricultural Sector - Agriculture Economic Statistics, June 2007, Vol. 6, no. 1 (21-016-XWE, free) is now available. From the Publications module of our website, under Free Internet publications, choose Agriculture.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Marco Morin (613-951-2074; marco.morin@statcan.gc.ca), Agriculture Division.
