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Balance sheet of the agricultural sector
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Farm sector equity in Canada increased 8.9% in 2007 to $252.3 billion, as assets rose more rapidly than liabilities. All provinces recorded an increase in equity in 2007.
Farm assets rose to $302.2 billion in 2007, an 8.0% increase over 2006. The value of farm real estate, which accounts for two-thirds of total farm assets, was the primary contributor, rising 8.8% to $201.9 billion. The value of farm quotas, up $3.4 billion in 2007, was also a factor. Decreases in livestock and poultry were offset by increases in the value of crop inventories.
Farm liabilities reached $49.8 billion, up 3.8% from 2006. Current liabilities advanced 2.8%, while long-term liabilities recorded an annual increase of 4.1%. Prince Edward Island and New Brunswick were the only provinces to record declining liabilities in 2007.
The assets and liabilities in the balance sheet of the agricultural sector include those of farm businesses and non-operator landlords (farm real estate assets leased to farm operators and the corresponding liabilities). They exclude the personal portion of farm households. This most closely reflects the assets and liabilities used in the production of agricultural products.
The debt-to-asset ratio continued to decline, reaching 16.5% in 2007, its lowest level since 1999. This ratio measures the dependence of farm businesses on debt.
The assets-to-current liabilities ratio moved up to 2.268 in 2007 from 2.088 in 2006. The lower ratios recorded since 2003 mean that operators within the agricultural sector have a reduced ability to pay short-term debts compared with earlier periods.
The interest coverage ratio assesses the ability to cover interest charges with the net income generated (before interest and taxes). This ratio increased to 1.897 in 2007 from the record low of 1.549 in 2006.
Return on equity rose slightly to 1.1% in 2007, following two consecutive annual decreases. The record low of 0.6% was set in 2006.
Note: Estimates in the balance sheet of the agricultural sector at December 31 and other data contained in the Agriculture Economics Statistics series have been revised to align with data from the 2006 Census of Agriculture.
Available on CANSIM: table 002-0020.
Definitions, data sources and methods: survey number 5029.
The publication Balance Sheet of the Agricultural Sector: Agricultural Economic Statistics, January 2009, Vol. 7, no. 2 (21-016-XWE, free), is now available. From the Publications module of our website, under All subjects, choose Agriculture.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Bernie Rosien (613-951-1875; bernie.rosien@statcan.gc.ca), Agriculture Division.
