Net Farm Income Down
During the first nine months of this year, Canadian farm cash receipts fell almost 6% from the year before, according to a Statistics Canada report released today.
“Many Canadian farmers faced difficulties from January to September, as cash receipts from crops and livestock declined,” said Statistics Canada today.
“Farm cash receipts from agricultural commodities and program payments totalled $25.2 billion, down $1.5 billion (-5.7%) from the same period of 2001 and the first decrease since 1998.”
Of course, these numbers hide the financial decimation incurred by many farmers across the country. These cash receipts provide an overall measure of farm businesses' gross revenue but do not account for expenses incurred. As well, cash receipts can vary widely from farm to farm and we all know that although some farmers in Canada enjoyed great yields and high prices both, many did not. And the receipts to the end of the fourth quarter do not show the full impact of this year’s poor crops.
Crop Receipts
Crop receipts for the first three quarters dropped 1.5% from the same period of 2001. Lower deliveries for most of the major grains and oilseeds more than offset the increase in prices for all of them. At $9.9 billion, crop receipts remained 2.9% below the previous five-year average (1997 to 2001).
Crop receipts are down because there’s been less to sell. Farm stocks of grains and oilseeds dwindled to low levels at the end of 2001 and then along came drought. “At the end of September, on-farm stocks were the lowest on record and 35.0% below the five-year average for the period,” noted StatsCan.
Livestock Receipts
Livestock revenues fell more heavily than crop receipts. Livestock receipts totalled $13.3 billion, down 5.8% from the same period in 2001.
Cattle and calf sales brought in $5.4 billion in the first three quarters of 2002, down 6.6% from the first nine months of 2001. Average prices were down 7.6%.
Hog receipts fell 13.7% to $2.6 billion as prices slumped 21%.
Government Money
Program payments from the government decreased for the first time since 1997, falling 20.6% to $2.1 billion in the first nine months of 2002. “Most of this decrease can be attributed to the completion of one-time emergency assistance payments implemented in 2001, coupled with reduced payments delivered through income disaster and provincial stabilization programs,” said StatsCan.
Crop insurance payments hit a record level of $803 million in the first nine months of 2002. This represented an 88.5% increase from the same period in 2001 and more than triple the previous five-year average. This increase was in response to poor growing conditions and to an increase in the acreage of crops insured.
Conclusions
Statistics Canada does not forecast farm cash receipts, operating expenses or net income. It’s the Agriculture & Agri-Food department that does some forecasting. This StatsCan report does say, however, that today’s data do not reflect the financial impact of the extreme weather seen on farms during the 2002 growing season, which is just beginning to be reflected in the cash receipts released here.
“The effect of this year's crop production and marketing will continue to be seen more in the fourth quarter of 2002 and the first half of 2003. The final 2002 field crop production estimates will be published on December 5.”
Notes
Farm cash receipts measure the gross revenue of farm businesses in current dollars. They include sales of crops and livestock products (except sales between farms in the same province) and program payments. Receipts are recorded when the money is paid to farmers before any expenses are paid.
Program payments include payments tied to current agricultural production and paid directly to farmers. Examples of these payments come under the Net Income Stabilization Account, the Crop Insurance Act, provincial stabilization programs and the Canadian Dairy Commission Act. The program payments series does not cover all payments made to farmers nor does it represent total government expenditure under all assistance programs.
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