Farm Income Forecast for 2013 and 2014
The Farm Income Forecast (FIF) is prepared in consultation with the provincial governments and Statistics Canada. Reflecting information available up until mid-December 2013, it is Agriculture and Agri-Food Canada's (AAFC) measure of the financial strength of the agriculture sector and its contribution to Canada's economy. This forecast represents a federal-provincial consensus on the outlook for farm receipts, expenses, and net incomes for the previous (2013) and current (2014) calendar years.
Agriculture and Agri-Food Canada's (AAFC) Farm Income Forecast projects that Canadian farmers' net income in 2013 and 2014 will remain at the historically high levels seen in recent years. An excellent 2013 harvest in Canada for key grains and oilseeds will be a major contributor to strong sector performance in both years.
In 2013, net incomes are expected to be just shy of the historical peak seen in 2012 despite a reduction in program payments and a decline in crop prices in the fall. Worldwide production has surged in response to reduced stocks and the record high prices caused by the severe U.S. drought in 2012. Net income was supported by a combination of strong crop prices for most of the year, robust hog and cattle prices due to low North American supplies, and a record harvest on the Prairies. Although program payments declined, this was due to favourable production conditions in 2013 and generally healthy profits over the last few years.
Canadian net cash income for 2013 is projected to total $13.2 billion, only 1% lower than in 2012. Farm-level average net operating incomeFootnote 1 is forecast to be $68,498, an all-time high.
Record 2013 crop production and low crop prices at the end of the year have led to the retention of large crop inventories heading into 2014. While these stocks will be marketed and will contribute to farm income in 2014, incomes are forecast to drop modestly as low prices persist into the year and yields from the 2014 harvest are assumed to return to average.
Total livestock receipts will not change significantly in 2014, but cattle and hog farms will continue to see tight markets and higher prices. However, adoption of the latest U.S. Country of Origin Labelling (COOL) standard will add to the cost of handling Canadian animals and further reduce U.S. demand.
Additional indicators in this forecast suggest a positive economic situation for farmers and their families in 2013 and 2014. Average total income of farm families, which includes net operating income from farming operations and other family incomeFootnote 2, is projected to reach $128,517 in 2013 and $132,579 in 2014. With regard to the balance sheet, average net worth per farm is expected to reach $1.9 million in 2013 and $2.0 million in 2014.
AAFC's Medium Term Outlook suggests that many of the drivers of farm income over the two-year period of the forecast will also be felt over the next 10 years. These include a continued tight supply-demand balance for red meats in North America, low inflation, and slow-to-moderate Canadian population growth.
Highlights, Canadian Agriculture, 2012 to 2014
|Source: Statistics Canada, CANSIM Tables 002-0001 and 002-0009.
Statistics Canada, Whole Farm Data Project: Net Operating Income (preliminary) for 2012.
Agriculture and Agri-Food Canada: forecast figures for 2013 and 2014, except for Total Family Income and Net Worth, with forecast figures for 2012 to 2014.
* The percent change calculation may not be exact due to rounding.
|($ millions)||(%)||($ millions)||(%)|
|Total Market Receipts||50,746.9||44,253.5||51,415.6||1||16||50,610.7||-2||14|
|Total Cash Receipts||54,189.3||47,749.1||53,996.0||0||13||53,389.7||-1||12|
|Net Operating Expenses||40,841.3||37,527.6||40,764.5||0||9||40,825.3||0||9|
|Net Cash Income||13,348.0||10,221.5||13,231.5||-1||29||12,564.4||-5||23|
|Net Operating Income, Avg||67,633||54,518||68,498||1||26||65,243||-5||20|
|Total Family Income, Avg||123,947||108,409||128,517||4||19||132,579||3||22|
|Net Worth, Avg||1,779,842||1,528,074||1,893,211||6||24||1,995,409||5||31|
- Footnote 1
Net operating income is calculated without including changes in the value of inventories and before deduction for depreciation.
- Footnote 2
Other family income includes income from off-farm sources and farm wages paid to family members.
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