Net cash income comparison

The net cash income estimates in the Net Farm Income, Agriculture Economic Statistics are the official Statistics Canada estimates. Other estimates of net cash income (farm cash receipts minus operating expenses) can be derived from the data from the Agriculture Division of Statistics Canada – namely those of the Agriculture Taxation Data Program (ATDP), the Farm Financial Survey (FFS) and the Census of Agriculture. It is important to understand coverage and conceptual differences when comparing data collected for different purposes. Adjustments are required to make these estimates comparable.

1. Conceptual Differences

Note that the text below is based on the differences that existed for the 2015 reference year.

a) Net Farm Income - Agriculture Economic Statistics

The Agriculture Economic Statistics (AES) estimates include all agricultural businesses. These data are not available by farm type, sales classes, and sub-provincial regions or at the micro level.

Receipts and expenses are estimated by calendar year. They are recorded on a cash basis when the money is paid to or disbursed by the farmer.

AES receipts and expenses exclude: income earned from non-agricultural use of the farm (e.g., income from tourism activities on farm); income that farm operators or their families receive from other sources (e.g., wages and salaries from non-agricultural activities, and investment income); revenue or expenses from the sale or purchase of farm capital (real estate, machinery and equipment), although the interest paid on these purchases is included as an expense; capital payments where funds do not relate to current production and transfer payments (such as training allowances) directed to individuals; unlike the ATDP, FFS and Census of Agriculture, AES estimates exclude farm-to-farm transactions, unless they occur across provincial or national borders. Within a province, sales from one farm are considered an expense to another, thus offsetting each other.

b) Agriculture Taxation Data Program

The Agriculture Taxation Data Program (ATDP) is an annual census of unincorporated and incorporated tax-filer records designed to estimate a range of financial agricultural variables.

The target population consists of all unincorporated, incorporated and communal farms in Canada. For statistical purposes, the estimates presented cover both unincorporated farms and communal farming organizations with total farm operating revenues equal to or greater than $10,000 as well as incorporated farms with total farm operating revenues of $25,000 and over.

The estimates are published on a calendar year basis but no attempt is made to adjust data from agricultural corporations reporting data on a fiscal year that may not coincide with a calendar year.

The TDP "Total Operating Revenues" includes revenues from "Custom Work and Machine Rental" and "Rental Income" which are not included in the AES farm cash receipts.

c) Farm Financial Survey

The Farm Financial Survey (FFS) is a sample survey which collects information on assets, liabilities, revenues, expenses, capital investments and capital sales.

The 2015 sample includes both incorporated and unincorporated farms with annual sales from agricultural activities of $25,000 and over. Unlike the other sources, it excludes farms that are parts of multi-holding companies. Commencing with the 2015 reference year, data from the Farm Financial Survey will be linked with taxation data at the micro level. For respondents that give Statistics Canada permission to share these data with Agriculture and Agri-Food Canada (AAFC) and provincial ministries of agriculture, the taxation data will be used in the estimates of receipts and expenses. Linkage results will be used to produce aggregate estimates for revenues and expenses data together with survey responses from those who refuse to share taxation data with AAFC and provincial ministries of agriculture. As with the ATDP, no adjustment is made to agricultural corporations reporting data on a fiscal year that may not coincide with the calendar year period.

The FFS "Total Gross Farm Receipts" includes agricultural custom work receipts that are not directly accounted for in the AES farm cash receipts. The treatment of "custom work" is similar to the ATDP.

d) Census of Agriculture

The Census of Agriculture (CEAG) is a census of farm operations producing agricultural products with the intention of selling them. The questionnaire continues to ask for total receipts and total operating expenses although starting in 2016 no questions are posed about detailed expenses. Data are generally provided on a calendar year basis, or for a complete fiscal year.

Unlike the AES, CEAG data on receipts include dividends received from co-operatives, Goods and Service Tax (GST) refunds, custom work receipts, and rebates received.

2. Comparison of estimates

Conceptual and methodological differences and data collection methods can result in misleading comparisons between AES receipts or expenses series and total income or expenses derived from ATDP, FFS or Census of Agriculture data. The exclusion of farm-to-farm transactions within a province in the AES and their inclusion in the ATDP, FFS and CEAG datasets is the main reason making the comparison difficult. However, net cash income estimates (farm cash receipts minus operating expenses) are more directly comparable since, within a province, sales from one farm is an expense to another farm, thus offsetting each other.

As is the case with farm-to-farm sales, some receipt items not included in the AES receipt series would tend to cancel each other out when deriving net cash income estimates from the various sources. For example, the exclusion of custom work receipts in AES receipts is compensated to a large extent in the net income estimates by the use of a net custom work estimate (custom work expenses minus custom work receipts) in the AES expense series. The subtraction of custom work receipts from custom work expenses is done in an attempt to minimize—in the aggregate—the presence in the AES of operating costs incurred by agricultural producers in providing custom work services. In a less precise manner, one could expect the ATDP estimates for the components of "miscellaneous revenue" and "miscellaneous farm expenses" not included in the AES series to offset each other to some degree.

The ATDP publishes average receipts and expenses only for farms reporting total farm operating revenues of $10,000 or more on their income tax return and agricultural corporations reporting total farm operating revenues of $25,000 and over, and for which 50% or more of their sales come from agricultural activities. For purposes of comparisons with the AES, estimations for the unincorporated farms reporting total operating revenues below $10,000 were used internally in spite of the lower quality of these estimates.

3. Results

Table 1 — Net cash income comparison — Total
  2015
AESTable 1 footnote 1 ATDPTable 1 footnote 2 CEAG FFSTable 1 footnote 3
thousands of dollars
Newfoundland and Labrador 12,763 22,028 17,972 12,086
Prince Edward Island 89,785 73,487 78,871 52,199
Nova Scotia 83,846 80,154 81,808 89,812
New Brunswick 126,195 106,855 98,644 84,379
Quebec 1,575,126 1,731,232 1,690,975 1,362,930
Ontario 2,501,771 2,478,764 2,352,070 1,639,627
Manitoba 1,122,500 1,385,099 1,265,851 945,978
Saskatchewan 5,196,363 3,561,027 3,051,856 2,308,937
Alberta 3,134,977 3,340,600 2,764,468 2,079,152
British Columbia 494,475 609,048 575,971 406,585
Canada 14,337,801 13,388,293 11,978,487 8,981,686
Table 1 footnote 1

The Agriculture economic statistics (AES) and the Census of agriculture (CEAG) cover all agricultural holdings. For comparison purposes, the Canada total is the sum of the provincial totals.

Return to Table 1 footnote 1 referrer

Table 1 footnote 2

Adjusted to include unincorporated farms with total farm operating revenues lower than $10,000. Does not include agricultural corporations with total operating revenues below $25,000.

Return to Table 1 footnote 2 referrer

Table 1 footnote 3

Does not include farms with total operating revenues below $25,000. It also excludes farms that are part of multi-holding enterprises.

Return to Table 1 footnote 3 referrer

Table 2 — Net cash income comparison — Absolute Difference
  2015
ATDP - AESTable 2 footnote 1 CEAG - AESTable 2 Footnote 2 FFS - AESTable 2 Footnote 3
thousands of dollars
Newfoundland and Labrador 9,265 5,209 -5,886
Prince Edward Island -16,298 -10,914 -26,671
Nova Scotia -3,692 -2,038 8,005
New Brunswick -19,340 -27,551 -14,265
Quebec 156,106 115,849 -328,045
Ontario -23,007 -149,701 -712,443
Manitoba 262,599 143,351 -319,873
Saskatchewan -1,635,336 -2,144,507 -742,919
Alberta 205,623 -370,509 -685,316
British Columbia 114,573 81,496 -169,386
Canada -949,508 -2,359,314 -2,996,800
Footnote 1

Agriculture Taxation Data Program (ATDP) minus the Agriculture Economic Statistics (AES).

Return to Table 2 footnote 1 referrer

Footnote 2

Census of Agriculture (CEAG) minus the AES.

Return to first Table 2 footnote 2 referrer

Footnote 3

Farm Financial Survey (FFS) minus the AES.

Return to first Table 2 footnote 3 referrer

Table 3 — Net cash income comparison — Relative Difference
  2015
(ATDP - AES) / AESTable 3 Footnote 1 (CEAG - AES) / AESTable 3 Footnote 2 (FFS - AES) / AESTable 3 Footnote 3
percent
Newfoundland and Labrador 72.6 40.8 -46.1
Prince Edward Island -18.2 -12.2 -29.7
Nova Scotia -4.4 -2.4 9.5
New Brunswick -15.3 -21.8 -11.3
Quebec 9.9 7.4 -20.8
Ontario -0.9 -6.0 -28.5
Manitoba 23.4 12.8 -28.5
Saskatchewan -31.5 -41.3 -14.3
Alberta 6.6 -11.8 -21.9
British Columbia 23.2 16.5 -34.3
Canada -6.6 -16.5 -20.9
Footnote 1

Agriculture Taxation Data Program (ATDP) minus the Agriculture Economic Statistics (AES) divided by the AES.

Return to Table 3 footnote 1 referrer

Footnote 2

Census of Agriculture (CEAG) minus the AES divided by the AES.

Return to first Table 3 footnote 2 referrer

Footnote 3

Farm Financial Survey (FFS) minus the AES divided by the AES.

Return to first Table 3 footnote 3 referrer

4. Conclusion

Comparing data collected for different purposes is not an easy task. It is extremely difficult to identify precisely what causes the discrepancies at the aggregate level. There will be always discrepancies due to differences in coverage, accounting methods, fiscal years as well as the edit, imputation and estimation methods of the survey, census or administrative data. These differences are often compounded in an estimate, such as net cash income, that is measured residually.

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