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Realized net farm income up in 2008

Statistics Canada reports that in 2008, realized net farm income was up $1.3 billion from 2007, to $3.3 billion. Although there were some provinces that saw decreases, the overall impact marked the second consecutive year there has been an increase.

May 25, 2009  By Statistics Canada

May 25, 2009

Realized net farm income (the difference between a farmer's cash receipts and operating expenses minus depreciation, plus income in kind) amounted to $3.3 billion in 2008, up $1.3 billion (+63.2 percent) from 2007. This was the second consecutive annual increase after declines in 2005 and 2006.

Realized net farm income decreased in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, and Manitoba, where large increases in operating costs outpaced gains in receipts. The remaining provinces all showed increases over 2007 levels.


Crop producers continued to benefit from higher grain and oilseed prices through the first part of 2008, more than offsetting large increases in operating costs.

Meanwhile, many livestock producers were adversely affected by higher feed costs and reduced prices resulting from the strong Canadian dollar vis- -vis its American counterpart in the first part of the year, as well as uncertainty over the Country of Origin Labelling law in the United States.

Farm cash receipts

Market receipts (revenues from the sale of crops and livestock) increased 14.1 percent to $41.8 billion in 2008. Crop receipts increased 25.2 percent, mainly as a result of higher prices, while livestock receipts rose 2.9 percent

Grain and oilseed prices began to climb in the fall of 2006 and peaked in mid-2008, the result of strong global demand and tight supplies. Since then, prices have fallen in the wake of rising stocks and the impact of the financial crisis and the economic downturn on the global demand for commodities.

In the livestock sector, revenue from hogs declined 2.9 percent, the fourth consecutive annual decrease. Both prices and the number of head sold fell in 2008. Market receipts for cattle and calves increased 2.4 percent in 2008, as more cattle were exported into the United States; exports were up 13.6 percent over 2007.

Supply-managed commodities (dairy, poultry and eggs) showed a 5.7 percent increase in receipts, as rises in production costs pushed prices higher.

Total farm cash receipts, which include both market receipts and program payments, rose in all provinces in 2008. The largest increases occurred in Saskatchewan (+22.0 percent) and Alberta (+15.5 percent).

Farm expenses

Producers saw their operating costs increase 11.1 percent to $37.5 billion in 2008, as fertilizer and fuel prices soared. This was the strongest annual rate of growth in expenses since 1981.

Over half of the increase was attributable to increases in fertilizer and machinery fuel expenses. Higher grain prices resulted in higher feed costs for the livestock sector as feed expenses rose 15.1 percent.

Expenses rose in all provinces in 2008. The largest increases occurred in the Prairie provinces.

Total net income

Total net income amounted to $6.1 billion in 2008, up $5.1 billion from 2007, despite declines in six provinces. Net income increased in Ontario, Manitoba, Saskatchewan and Alberta.

Total net income adjusts realized net income for changes in farmer-owned inventories of crops and livestock. It represents the return to owner's equity, unpaid labour, management and risk.

An increase in the farmer-owned inventories of crops was the primary factor behind the rise in total net income, as inventories of cattle and hogs declined.

The value of inventory change was $2.8 billion in 2008, as record yields for many crops boosted production in Ontario and the Prairie provinces. Year-end stocks of canola, dry peas and oats were at record highs in 2008, while stocks of most other grains and oilseeds also increased.

Net value added

Agriculture's net value added rose $5.4 billion to $14.9 billion in 2008. The main contributors were higher grain and oilseed prices and strong crop production.

Net value added measures agriculture's annual contribution to the national economy's production of goods and services. It is derived by calculating the total value of agricultural sector production, including program payments, and subtracting the related costs of production (expenses on inputs, business taxes and depreciation).

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