Reuters — Canadian farmers’ incomes will decline seven per cent in 2017, falling for the second year in a row but remaining at above-average levels, the country’s agriculture department predicted on Friday.
A drop in North American cattle and calf prices from record highs in 2015 is the main reason for the two-year dip, Agriculture and Agri-Food Canada (AAFC) said in a statement.
Net cash income, which measures revenue minus operating expenses, is expected to slide by $1 billion, to $13.8 billion in 2017, following a two per cent decline in 2016. Those two years are still expected to be among the highest income years on record.
Livestock receipts are expected to drop by seven per cent in 2016 to $23.9 billion, and further by four per cent in 2017, as a result of downward pressure on North American red meat prices from growing meat supplies in the U.S., AAFC said.
Crop receipts, however, are expected to rise two per cent to $32.6 billion in 2016 and a further one per cent to $32.9 billion in 2017.
Crop receipts for 2016 are expected to rise based mainly on the volumes of canola marketed last year — and, for 2017, on an overall increase in grain marketings in 2017, given last fall’s large crop.
Given the reduced receipts overall, program payments are expected to rise by 24 per cent in 2016 to $2.6 billion, and by a further 22 per cent in 2017 to $3.2 billion, AAFC said.
Canadian farmers’ incomes have historically followed the same trend as U.S. farm incomes, but diverged in 2014-15 due to depreciation of the Canadian dollar, AAFC said, which helped Canadian exports.
U.S. farm income is forecast to fall 8.7 per cent to US$62.3 billion in 2017, another blow to an already reeling agriculture sector, the U.S. Department of Agriculture said last week.
Farmers’ income levels are watched closely by companies that sell fertilizer, chemicals and machinery, such as Agrium and Deere.
Canada is a major wheat exporter and the biggest producer and exporter of canola.
Farm Credit Canada, a government-backed lender, said in September that Canadian farmers’ debt would likely reach another record high in 2016, while incomes flatten, but the industry is still in strong financial shape.
Canadian farm operating expenses are forecast to decline by about one per cent in 2016, to $44.2 billion, and rise two per cent in 2017 to $45.1 billion, AAFC said Friday.
The department also forecast the net worth of the average Canadian farm in 2017 will rise to $2.8 million.
— Reporting for Reuters by Rod Nickel in Winnipeg. Includes files from AGCanada.com Network staff.