Agriculture and Agri-Food Canada's Farm Income Forecast is a key tool for monitoring income in the farm sector, and understanding the short-term outlook for primary agriculture.
The agriculture sector is forecast to have seen strong financial performance in 2021, despite the challenges of COVID-19, drought in Western Canada, and other regional challenges.
Despite a challenging year, agriculture in Canada continues to show strength
Net Cash Income is forecast to have grown significantly in 2021 – from $17.8 billion in 2020 to a new record of $26.6 billion, amounting to a 49.1% increase. Large increases in receipts and program payments are projected to have outpaced increases in expenses and production losses due to drought.
Much of this increase in receipts is due to higher prices. Strong grain prices are expected to more than offset the declines in production due to the drought in Western Canada, boosting grain receipts to a new high. Higher hog prices are also expected to contribute to overall higher livestock receipts. Program payments are also forecast to see a strong increase in 2021, up 88.7% compared to 2020, largely due to higher crop insurance payments driven by drought-related losses.
Operating expenses are also forecast to increase substantially in 2021, as prices for key inputs also increase, however increases in receipts are expected to be larger, outweighing the increase in expenses.
Average Net Operating Income per farm is also forecast to have risen significantly in 2021, increasing to approximately $145,074 in 2020 – up 58.6% from $91,494 in 2020 and 69.7% higher than the 5-year average. Average farm family income is also forecast to have increased 26.8% to $229,463, driven by increases in Net Operating Income from farming. Average net worth increased by 7.1%, to $3.6 million per farm.
In 2022, lower grain marketings are expected, as less crop is available for marketing in the first half of 2022 due to the drought-driven reduction in production in the 2021 harvest. As such, Net Cash Income is forecast to decline 25.8% to 19.7 billion. While this would be a substantial decline it would still make 2022 the second strongest year on record. Farm-level income is also expected to see a comparable drop of 26.5% to $106,582. Forecasts for 2022 are subject to a number of uncertainties, including COVID-19 disruptions, growing conditions, and severe weather events.
- Net Cash Income is forecast to rise in 2021 to a substantial new record. Net Cash Income is forecast to fall in 2022, but still remain at a high level. Balance sheets overall are expected to remain strong as well.
- Price growth was the main driver of the increases in receipts and expenses in 2021. Prices are not expected to see the same rate of growth in 2022, but for many major commodities prices are expected to stay at relatively high levels.
- Despite strong overall performance, there were still several significant challenges in 2021. In addition to COVID-19 continuing to have an impact on general economic performance and the emergence of the Omicron variant late in 2021, drought in Western Canada significantly reduced crop yields in the grains sector. There were also several regional challenges late in the year, including the flooding in B.C. and the emergence of potato wart in P.E.I. The outlook on these challenges is uncertain, but they are expected to continue to have an impact in 2022.
For more detailed information, please contact email@example.com