Farm operating revenues and expenses, 2020

In addition to climate change and trade barriers being major factors that greatly affected farming, 2020 added another factor with the global COVID-19 pandemic. Despite this, Canadian farmers experienced a profitable year due in large part to higher crop revenues, bouncing back after a year of reduced exports to China.

In 2020, agricultural operations reported $568,708 in operating revenues on average, up 12.0% from 2019. Average operating expenses also increased but by a smaller margin (+9.1%), to $470,973. As a result, average net operating income increased by 28.5% to reach $97,736 in 2020.

The average operating profit margin (the ratio of net operating income to operating revenue) stood at 17.2 cents per dollar of revenue in 2020, compared with 15.0 cents per dollar in 2019.

The gain in average operating revenue was mainly attributable to the higher revenues of total crops (+17.7%) and livestock products (+10.8%). The increase in operating expenses was largely driven by increases in the cost of livestock feed (+11.1%) and livestock purchases (+17.7%).

The Agriculture Statistics Program introduced a new definition of the farm in 2020. This new definition is based on operations reporting agricultural revenues and expenses as opposed to the previous definition, which was based on the intention to sell agricultural commodities. While this change provided results that were more reflective of business operations involved in agriculture, data users are advised to use caution when comparing data from previous years.

Crop revenues accounted for 48.0% of all operating revenues earned by Canadian farms in 2020, while livestock revenues accounted for 40.5%. The remaining revenues came from program payments, insurance proceeds, as well as from other revenues, such as custom work and machine rental.

Continue reading