Canadian farm income was still positive last year, even if it wasn’t as strong as previously expected.
A Statistics Canada farm income report on Tuesday pegged 2023 national realized net farm income at $13.6 billion. That is down from the late May projection of $14.5 billion but still represents a 13.7% increase from 2022. (Stripping out cannabis returns makes the 2023 farm income picture look a bit weaker still, with realized net farm income rising a more modest 11% year-over-year).
Realized net farm income - which measures the difference between a farmer's cash receipts and operating expenses, minus depreciation, plus income in kind - has been volatile, soaring 71% in 2021 amid strong commodity prices, before posting a 5.3% decline in 2022 on higher farm expenses.
Compared to a year earlier, changes in realized net income ranged from an increase of $1.7 billion or almost 41% in Saskatchewan to a decline of $290.1 million in Quebec. The gains in Saskatchewan were mainly the result of reductions in fertilizer prices, the largest expense item in the province, while lower hog receipts were the main factor in the decrease in Quebec.
At $2.3 billion, realized net farm income in Ontario was down 4.7% on the year, while Manitoba declined 10.2% to $1.7 billion. Alberta realized net farm income was 5.7% higher at $3.3 billion.
According to today’s StatsCan report, the gain in 2023 national realized net farm income was due to rising farm cash receipts more than offsetting an increase in expenses.
Farm cash receipts – which include crop and livestock returns as well as government program payments - rose 4.6% compared with 2022 to $99.4 billion. On the other side of the leger, total farm operating expenses (after rebates) rose 3.4% to $75.4 billion in 2023 — a modest gain compared with the 19.4% increase in 2022.
Total farm cash receipts were primarily buttressed by strong livestock returns, which increased 10.1% to $37.4 billion, the third straight year of growth. Receipts for cattle and calves were up sharply, rising 27% to $15 billion in 2023, primarily due to higher slaughter cattle receipts, which increased by more than 22%. Returns for the supply management sector were higher as well, climbing 5.7% to $14.9 billion.
On the other hand, receipts for hogs dropped 10.3% to $5.9 billion, driven by an 11.4% reduction in prices. Slaughter hogs were responsible for more than three-quarters of the decline in total hog receipts, StatsCan said.
As for crops, receipts rose 3.1% to $55.4 billion in 2023, a marked change following three consecutive years of double-digit percentage gains. Wheat (excluding durum) was responsible for 58.7% of the gain in total crop receipts, while fresh potatoes accounted for 13.7%. At $13.6 billion, canola returns were little changed from 2022 amid higher marketings. Soybean returns slipped 1.3% to $4.1 billion, while corn receipts dipped 7.2% to $3.5 billion.
Government payments to producers amounted to $6.6 billion in 2023, down 10.3% on the year, mainly due to falling crop insurance payments on the Prairies.
In terms of farm expenses, interest costs were a major contributor, jumping almost 39% to $6.9 billion. Debt levels were up 4.1%, while average interest rates soared by about one-third after the Bank of Canada started to raise rates. In fact, this past year marked the largest increase in interest expenses since 1981 (+50.1%), when they comprised 18.3% of total operating expenses. While the interest share of total farm expenses was relatively lower in 2023, at 9.2%, it was nevertheless at its highest level in over 20 years.
