Record gains in Canada’s crops sector are expected to boost the overall income of Canadian farmers in 2007 and again in 2008, Agriculture and Agri-Food Canada forecasts.
AAFC, the provinces and Statistics Canada on Friday released their farm income forecast for 2007 and 2008, pointing to a substantial increase in income from crops. But rising expenses are expected to eat up much of whatever gain might be made in livestock — and to take cattle and hog farms into negative net income for 2008.
The forecasts assume an average exchange rate of US96.4 cents to the Canadian dollar for 2007 and US$1.05 in 2008, as well as average West Texas Intermediate crude oil prices of US$71 per barrel for 2007 and US$80 in 2008. The forecasts are also based on StatsCan’s Dec. 6 preliminary estimates of seeded acres.
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2007
Net farm income for the average farm in Canada is forecast to be $35,314 in 2007, up 20 per cent from 2006, spurred by improved grain and oilseeds prices. Average non-farm income is estimated at C$53,338 per farm. At $88,652, average farm family income is expected to rise 10 per cent to $88,652.
The average farm with under $250,000 in sales is expected to earn most of its income from non-farm income in both 2007 and 2008, while farms with over $250,000 in sales are forecast to get a greater portion of family income from the farm.
Net farm income for the average farm in B.C. is expected to be less than the average per farm in Canada, due to much higher expenses. Net farm income shows “significant improvement” in Alberta, Saskatchewan and Manitoba and in Quebec is also expected to be well above that of the average Canadian farm.
The average grains and oilseeds farm is expected to earn $54,186 in 2007, while the average horticulture farm is expected to earn $71,387 — well above the average farm in Canada, AAFC noted. Crop cash receipts are expected to set a new record at just over $18 billion.
For the average cattle farm, meanwhile, net farm income is expected to drop to just $2,393, while for the average dairy farm, income is expected to be stable at $99,156. The average hog farm’s net is expected to be “minimal” in 2007, AAFC forecast. Total livestock cash receipts are expected to rise by just two per cent in 2007 as the high value of the Canadian dollar later in the year slowed any price gains previously expected in Canada this year.
Program payments per farm are expected to fall by seven per cent in 2007, and to total $4 billion, down from the record $4.9 billion in 2005. Cash expenses are also expected to rise eight per cent to $34.1 billion, mainly due to the costs of energy and of fertilizer, which alone is expected to jump in price by 20 per cent to record levels in 2007.
2008
Net farm income for the average farm in Canada is forecast at $41,021 in 2008, up another 16 per cent, while average non-farm income per farm is expected to be $55,386.
However, AAFC wrote, net farm income is expected to rise for mid-size farms in 2008, where receipts can keep pace with high expenses and lower program payments. For example, farms with over $100,000 in sales but under $1 million are expected to see greater net gains compared to farms with under $100,000 in sales.
Higher costs are again expected to weigh on net farm income in B.C., while net farm income shows “further improvement” in Alberta, Saskatchewan and Manitoba. Further east, net farm income is expected to drop for the average farm in most provinces except Prince Edward Island and Ontario.
Net farm income for the average grains and oilseeds farm is expected to rise in 2008 to near $76,093, compared to $86,833 per average horticulture farm. Crop receipts in aggregate are expected to rise another 14 per cent to a record $20.7 billion.
Expenses are expected to continue to darken the picture in the livestock sector, as net farm income in 2008 is expected to drop below zero for the average cattle and hog farms, and the average dairy farm’s net will drop to $90,518.
Program payments per farm are expected to remain stable in 2008, but the aggregate program payments will drop six per cent to $3.8 billion as crop receipts rise and some shorter-term programs come to a close. And overall farm cash expenses in 2008 are expected to reach a record at over $35 billion, mainly due to higher fuel and feed costs.
