reuters / Canadian farmers recorded record-high net income in 2011, but their earnings are likely to slip modestly in 2012, Canada’s Agriculture Department said last Monday.

In 2011, strong crop and livestock prices, combined with higher government payouts for flooding in Western Canada more than offset higher operating expenses, Agriculture and Agri-Food Canada said in a report. Net cash income reached $11.7 billion in 2011.

Prices of grains and oilseeds rose in 2011 because of low worldwide stocks, partly due to a poor 2010 harvest in eastern Europe, the government department said.

2012 will also be a strong year for farmers, as income from market sources rises faster than expenses, Agriculture Canada said. While grain prices are projected to ease, receipts should climb slightly as farmers look to plant more acres.

Overall income is forecast to slip in 2012 — by four per cent to $11.2 billion — as the department does not assume catastrophic weather will trigger large government payouts.

A dry winter in Western Canada suggested farmers may have little difficulty planting fields, but a lack of moisture may cause crops to struggle.

Ag Canada also expects grain and oilseed prices to remain high for the next decade as a result of strong global demand, declining growth in crop yields, high energy prices and a relatively weak U.S. dollar. Prices for Canadian farmers should ease from recent peaks over the long term as farmers boost planted areas.

Cattle exports should benefit from an expected revision of the U.S. mandatory meat-labelling law, starting in 2013, the Agriculture Department said.

The World Trade Organization last year sided with Canada and Mexico that the U.S. law is unfair. However the United States can still appeal.