WESTERN PRODUCER — Agriculture Canada said farmers’ net cash income in 2021 will likely set a new record of $26.6 billion, despite the challenges farmers faced last year.
The department said net cash income is expected to have grown 49.1 percent from $17.8 billion in 2020.
“Large increases in receipts and program payments are projected to have outpaced increases in expenses and production losses due to drought,” said a farm income forecast released in late February.
The forecast acknowledged that individual farms will have experienced the year differently, and there will be variability, but the overall trend points to a strong industry that withstood drought, fires, floods, COVID-19 and other issues.
It said higher grain prices offset production declines due to the western Canadian drought, pushing grain receipts up 17 percent and a new high.
The analysis also shows higher hog prices contributed to an overall 15-percent increase in livestock receipts.
But the big change, year-over-year, is that more farmers received crop insurance and other program payments such AgriStability and the AgriRecovery drought payments in the West and parts of Ontario.
Payments are forecast to be up 88.7 percent to a record $6.5 billion. In Saskatchewan alone, crop insurance payments will be $2.4 billion.
University of Saskatchewan agricultural economics professor Peter Slade said assessing national numbers is difficult because receipts and income will vary depending on the province and the sector.
“Even within each province income for crop producers will vary widely this year due to regional differences in precipitation, the final prices farmers received and the amount of insurance farmers purchased,” he said.
He said it’s important to note that net cash income for 2021 includes some sales from the 2020 crop year.
“Quarterly data shows that crop receipts were up in Q1 and Q2 but were slightly down in Q3,” he said.
“The annual numbers for crop producers would, no doubt, be lower if it were done for the 2021 crop year, instead of the calendar year, or if done on an accrual basis.”
This is at least part of the reason why the forecast for 2022 is lower; low crop sales in the first two quarters of this year will affect incomes. The forecast suggests net cash income will drop 26 percent to $19.7 billion this year.
“While this would be a substantial decline it would still make 2022 the second strongest year on record,” said the forecast. “Farm-level income is also expected to see a comparable drop of 26.5 percent to $106,582.”
Other data in the forecast includes an expectation that average net operating income rose last year to $145,074 from $91,494 in 2020. That is nearly 70 percent above the five-year average.
Average farm family income also went up by 27 percent to $229,453, driven by the net operating income increases.
The average net worth is $3.6 million per farm, up by 7.1 percent. Farm expenses in 2021 are pegged at $60 billion, up 9.9 percent.
Slade said when the final numbers come in, the regional breakdowns will prove interesting.
“Based on average yields and prices from Statistics Canada, it would seem that western grain and oilseed producers will have lower crop receipts for the 2021 crop year compared to 2020 — price increases were not enough to offset the decreases in yields,” he said. “However, record crop insurance payouts will cushion this decline in market income.”
Final actual numbers will be released by Statistics Canada later this spring. The farm income estimate for 2021 is expected May 25. At that time, Agriculture Canada will update its 2022 forecast and provide a 2023 early forecast.
Meanwhile, fourth quarter cash receipt data released Feb. 28 showed receipts increased 13.7 percent to $81.9 billion in 2021. Crop receipts were up 9.2 percent, livestock 13.4 percent and direct payments 71.8 percent.
Farm cash receipts rose in all provinces last year except Prince Edward Island where they were flat. Most of the increase came in Alberta and Saskatchewan.
StatsCan said farmers received $3.9 billion more for crops, $3.5 billion more for livestock and $2.5 billion more in direct payments. Crop insurance payments account for 63 percent of those payments, which totalled $5.9 billion. Saskatchewan producers got $1.6 billion of that, and Alberta, $0.9 billion.
