The fall in Canadian farm income in 2022 was not as steep as originally expected although it was still a dramatic turn for the worse compared to the previous two years.
In a farm income report Tuesday, Statistics Canada estimated 2022 realized net farm income for Canadian producers at $11.8 billion, down 7.6% on the year. That is a more modest decline than the 9.5% drop StatsCan was projecting back in May but stands in sharp contrast to the nearly 70% increase posted in 2021 and the 101.6% jump recorded in 2020.
Excluding down trending cannabis returns, last year’s farm income picture looks a bit better, with 2022 realized net farm income - the difference between a farmer's cash receipts and operating expenses, minus depreciation, plus income in kind - down a more modest 5.9%.
According to StatsCan, total farm cash receipts, which include crop and livestock returns as well as government payments, actually increased year-over-year in 2022, rising 14.6% to $95.1 billion. However, the bottom line was undone by an 18.6% increase in total farm expenses (operating expenses and depreciation) to $83.4 billion.
Alone, farm operating expenses (after rebates) increased by 19.9% to $73.3 billion in 2022 — the largest gain since 1979 (+21.1%) — and easily surpassing the 9.5% rise in 2021.
“Farmers faced higher costs for key agricultural inputs, including fertilizer, feed and fuel,” StatsCan said.
Saskatchewan had the highest realized net farm income in 2022 at $3.84 billion, although that was down a steep 24.4% from a year earlier. Alberta realized net farm income, at $3.03 billion, was up almost 19% on the year, while Manitoba was down 2.1% at $1.55 billion. Ontario realized net farm income came in at $2.53 billion, an increase of just over 2%.
Nationally, crop returns were up $7.1 billion or 15.2% to $53.9 billion in 2022, while livestock receipts climbed $3.6 billion (+11.4%) to $34 billion. Broad gains in commodity prices helped push receipts higher last year, StatsCan said, noting that most crop prices continued their upward trend, which started at the beginning of the COVID-19 pandemic. Livestock prices built on gains recorded in 2021. The 2021 drought in Western Canada also led to increased crop insurance payments in 2022, the federal agency said.
The increase in crop returns was mainly driven by higher wheat and canola prices. For canola, prices were up almost 39% from the average 2021 level. That was more than enough to offset the 18.4% fall in marketings caused by the 2021 Prairie drought, with annual canola receipts rising 13.4% to $13.7 billion. Farm cash receipts for wheat (excluding durum) increased by 28.6% to $9.3 billion, as prices rose 41.8%, while marketings fell 9.3%.
Together, the increase in wheat (excluding durum) and canola accounted for over half of the growth in crop receipts.
Soybeans and corn also posted significant gains in 2022 compared with 2021. Corn returns increased $963.5 million or 33.1% to $3.86 billion, while soybeans receipts were up $1.1 billion or 37% to $4.24 billion.
For livestock, cattle receipts increased by 16.3% to $10.8 billion in 2022, primarily because of a rise in slaughter cattle receipts (+15.6%). Hog receipts grew 4.4% to $6.5 billion, as a 5.6% increase in prices outpaced a 1.2% fall in marketings. Both Ontario (+8.3%) and Manitoba (+9.8%) recorded strong increases in hog slaughter receipts.
On the other side of the ledger, fertilizer expenses for Canadian farmers increased by a whopping 54.4% to $11.7 billion in 2022. Fertilizer prices began to escalate in early 2021 and have continued to rise since then, StatsCan said, adding that Russia's invasion of Ukraine added more pressure to fertilizer markets, which had already been stressed by natural disasters and high natural gas prices.
In response to the invasion, Canada applied sanctions that included a 35% tariff on most goods coming from Russia, including fertilizers.
Commercial feed expenses for livestock producers increased by 20.7% to $11.6 billion in 2022, as the 2021 Prairie drought negatively affected pastures. Alberta, home to many of Canada's largest feedlots, imported record amounts of corn in 2022.
Machinery fuel expenses increased sharply as well, jumping by 52.5% to $4.3 billion in 2022. Fuel prices began to rise in 2021, as economies around the world opened up after taking measures to curb the spread of COVID-19.
