Farm income, 2016 (revised data)
Realized net farm income increases
Realized net farm income totalled $8.4 billion in 2016, up 4.2% from the previous year. This follows a 7.1% rise in 2015, and marks the sixth increase in the past seven years.
Realized net income is the difference between a farmer's cash receipts and operating expenses, minus depreciation, plus income in kind.
The increase came despite slower growth in farm cash receipts, as total operating expenses were essentially unchanged from 2015.
Realized net income rose in six provinces: Prince Edward Island, New Brunswick, Quebec, Ontario, Manitoba and Alberta. Quebec (+57.6%) and Ontario (+27.0%) contributed the most to the national increase.
Farm cash receipt growth continues, but at a slower pace
Farm cash receipts, which include market receipts from crop and livestock sales as well as program payments, rose 0.8% in 2016 to $60.3 billion. While it was the sixth consecutive increase, it was the smallest one over that period.
Market receipts totalled $57.9 billion, up 0.3% in 2016. A rise in crop revenue was sufficiently strong to offset a drop in livestock receipts.
Market receipts are the product of price and marketings. Marketings are quantities sold, using various units of measure.
Crop receipts increased 6.2% to $34.0 billion in 2016.
Canola receipts led the way, increasing 15.2% to $9.2 billion. Marketings rose 12.1%, to a record 19.5 million tonnes. Prices were up 2.8%, with demand exhibiting strength in both export and domestic markets.
A 46.2% rise in marketings combined with a 14.9% price increase pushed dry pea receipts 68.0% higher. Prices were up sharply for the first part of the year, as strong export demand supported prices.
The rise in crop receipts was moderated by declines in wheat (excluding durum) (-10.9%) and lentil (-11.0%) receipts. In both cases, declining marketings more than offset small increases in prices.
Livestock revenue fell 7.0% to $23.9 billion, as receipts declined for both cattle and calves, and hogs.
Lower prices for their stock meant cattle and calf producers saw their revenue decrease 17.2% to $8.7 billon. The 21.9% decline in price followed price hikes in 2014 (+38.3%) and 2015 (+20.2%). Ample North American cattle supplies have put downward pressure on prices.
Lower prices were also the primary factor for the 3.2% drop in hog receipts.
Moderating the decline in livestock receipts were gains in the supply-managed sector. Increased receipts for dairy (+2.4%), poultry (+2.9%) and eggs (+7.4%) were largely attributable to increases in volume sold.
Rising payments from provincial stabilization and private hail insurance contributed to the 14.4% increase in program payments.
Farm expenses hold steady
Farm operating expenses were essentially unchanged in 2016, up 0.2% to $44.9 billion.
Pesticide expenses rose 7.8%, as wet weather fostered favourable conditions for crop diseases in the Prairie provinces. This cost, along with unexceptional increases in most other expense items, was just enough to offset price-related declines in livestock and poultry purchases, fertilizer, and machinery fuel expenses.
A 1.0% rise in depreciation charges pushed total farm expenses 0.3% higher. Total farm expenses are the sum of operating expenses and depreciation costs.
Higher durum wheat and lentil inventories drive gains in total net income
Total net income grew $1.6 billion to $9.7 billion in 2016.
Total net income is realized net income adjusted for changes in farmer-owned inventories of crops and livestock. It represents the return to owner's equity, unpaid farm labour, management and risk.
Inventory changes were the primary factor for the rise, as increased on-farm stocks of wheat (including durum) and lentils more than compensated for a slight reduction in cattle inventories.
Total net income rose in Prince Edward Island, Quebec, Saskatchewan and Alberta, with the latter two provinces accounting for the bulk of the gains.
Note to readers
Realized net income can vary widely from farm to farm because of several factors, including the farm's type of commodities, prices, weather and economies of scale. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income.
Additional financial data for 2016, collected at the individual farm business level using surveys and other administrative sources, will be made available next year. These data will help explain differences in the performance of various types and sizes of farms.
Preliminary farm income data for the previous calendar year are first released in May of each year, five months after the reference period. Revised data are then released in November of each year, incorporating data received too late to be included in the first release. Data for two years prior to the reference period are also subject to this revision.
For details on farm cash receipts for the first three quarters of 2017, see the "Farm cash receipts" release in today's Daily.
As a result of the release of data from the 2016 Census of Agriculture on May 10, 2017, data on farm cash receipts, operating expenses, net income, capital value and other data are being revised, where necessary. The complete set of revisions will be released in the next 12 to 18 months.
Summary tables are also available.
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).
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