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 reaching a record in 2023, NCI is forecast to have declined in 2024 due in large part to falling grain prices, with a further decline expected in 2025, although to a level comparable to the 2019-2023 average.
Farm income is forecast to have declined in 2024, while average net worth is expected to have increased
NCI is forecasted to have declined 7 per cent from a record $24.0 billion in 2023 to $22.4 billion in 2024, which remains 17 per cent above the 2019-2023 average. Overall receipts are forecast to have declined, while expenses are expected to have marginally increased.
The key factor behind the expected fall in receipts is the continued decline in grain prices, which have been falling since their mid-2022 peak after markets stabilized in the wake of Russia’s war against Ukraine, leading to a 6 per cent decline in crop receipts. Direct payments are also forecast to have fallen 5 per cent. Partly mitigating this decline is a price driven increase in cattle receipts, as well as more modest growth in hogs and dairy receipts, leading to a 6 per cent increase in livestock receipts.
Operating expenses are expected to have remained high, but growth has slowed significantly since the large increases of 2021 and 2022, and are forecast to have increased less than 1 per cent in 2024. Some key expense items, such as feed, energy and fertilizer are expected to have declined while others, such as interest and labour costs, are forecast to have increased.
Average Net Operating Income (NOI) per farm, which measures producers’ revenue minus cash expenses at the farm-level, is also forecasted to have declined by 11 per cent to $127,000 in 2024, due to the same drivers as NCI. There is significant variability by farm type however, as grains, cattle, hogs and poultry and egg farm types are expected to have seen declines, while potato and horticultural operations are forecast to have seen an increase.
Despite the declines in income, average per farm net worth is forecast to have modestly increased by 1 per cent in 2024 to $3.9 million, as the increase in assets is expected to have been larger than the increase in liabilities.
Outlook for 2025
The forecast for 2025 is subject to significant uncertainties, such as continued volatility in global markets, as well as the potential impact of weather events. In particular, uncertainty around the trade environment, including the possibility of tariffs being put in place by the United States on imports from Canada, as well as the outcome from China’s anti-dumping investigation into Canadian canola, could have a significant impact on the 2025 forecast results. Neither of these impacts were included in the analysis as the implementation and impacts of any of these actions remains uncertain in mid-February.
That said, based on information available as of December 2024, NCI is forecast to fall 15 per cent to $19.1 billion in 2025, matching the level of the 2019-2023 average. This is mainly due to a continued decline in crop receipts and program payments, as livestock receipts and expenses are expected to be steady. A comparable decline of 14 per cent in average NOI per farm to $109,000 is also expected. Average net worth is forecast to further increase by 1 per cent.
For more information and supporting documents, please contact AAFC at aafc.info.aac@agr.gc.ca.