Farm Income Forecast for 2023 and 2024

Agriculture and Agri-Food Canada's Farm Income Forecast is a key tool for monitoring income and is used to understand the short-term outlook for primary agriculture in the farming sector.

Net Cash Income (NCI), which is the difference between cash receipts and operating expenses at the industry level, is the main metric that Agriculture and Agri-Food Canada uses to measure farm income. After being largely steady in 2022, NCI is forecast to have increased to a new record in 2023 despite market turbulence and challenging weather conditions in parts of the country.

Agriculture in Canada continues to show overall positive performance

Net Cash Income up 13%
Average Net Operating Income up 17%
Average farm family income forecast to increase 11%

NCI is forecasted to have grown 13% from $21.9 billion in 2022 to a new record of $24.8 billion in 2023. While both receipts and expenses are forecast to have seen slower growth in 2023 compared to recent years, receipts growth is still expected to have outpaced that of expenses.

The biggest driver of the increase in receipts is notable growth in the livestock sector, largely due to higher cattle prices, which increased significantly in 2023. This was mostly due to reduced North American cattle inventories in response to drought conditions in recent years. Supply-managed industries are expected to have seen more modest growth in receipts, while hog receipts are expected to have declined. Crop receipts are expected to have seen a smaller increase, as increased grain marketings in 2023 were largely counterbalanced by a decline in prices. Program payments are expected to fall from record high levels in 2022, mainly due to lower AgriInsurance payments, but would still be historically high.

Operating expenses are expected to have seen much smaller overall growth in 2023 compared to recent years. This smaller growth is because prices for key inputs, such as fuel and fertilizer, fell from recent highs seen in 2022 in the wake of Russia’s war on Ukraine. At the same time, other expenses, such as interest payments, are forecast to have continued increasing.

Average Net Operating Income (NOI) per farm, which measures producers’ revenue minus cash expenses at the farm level, is also forecasted to have increased in 2023. Average NOI per farm is forecasted to have increased to approximately $155,000 in 2023 – up 17% from 2022 and 34% higher than the previous five-year average. Most farm types are forecast to have seen their average NOI increase, except for modest declines for hog farms and poultry and egg operations. However, there can still be significant variability between individual farms. Average farm family income is forecast to have increased by 11% to $239,000, while average net worth is forecast to have increased by 4% to $3.9 million.

Outlook for 2024

The forecast for 2024 is subject to several uncertainties due to continued volatility in global markets, as well as the potential impact of weather events. That said, based on information available as of December 2023, NCI is forecast to fall 14% to $21.3 billion in 2024, although it would still be 28% above the 2018-2022 average. Declining crop receipts and only slight growth in livestock receipts are not expected to offset a modest increase in operating expenses. This is due to the fact that prices for major grains are expected to continue falling and cattle prices are expected to grow much more slowly. Despite this forecasted decline in NCI, 2024 would still be the fourth best year on record. A comparable decline of 13% in average NOI per farm to $134,000 is also expected.

Quick Facts

  • Net Cash Income (NCI) is forecasted to have risen to a new record in 2023 following a slight decline in 2022. NCI is forecasted to decline in 2024 but would be comparable to levels seen in 2021 and 2022.
  • Compared to previous years, growth in receipts and expenses in 2023 is expected to have been much more modest. Receipt and expense growth in both 2021 and 2022 were very strong and were driven by sharp increases in prices for both commodities and inputs, but many prices have fallen from recent peaks, moderating growth in 2023.
  • Despite positive overall performance, there were still many challenges in 2023. Geopolitical instability due to the ongoing Russia-Ukraine war, the ongoing conflict between Israel and Hamas, the impact of drought in Western Canada, and other weather-related difficulties all contributed to challenges in various parts of the country.
  • Inflation fell throughout 2023, moderating some of the pressure on expenses, and further declines are expected in 2024.

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