Record breaking net farm income in 2011, says Agriculture Canada
Friday, March 2, 2012
by SUSAN MANN
Net farm income in the agricultural sector is forecast to hit a record-breaking $11.7 billion for 2011, says a senior Agriculture and Agri-Food Canada official.
The 2011 figure is a nearly 24 per cent increase over the record high of $9.5 billion set in 2010. It’s also a new record both in nominal terms and when adjusted for inflation, says the official who couldn’t be named under terms set by the federal agriculture department in releasing the information. For 2012, net farm income is forecast to be $11.2 billion.
The 2011 forecasts are based on information that was available as of mid December.
Officials released the rosy farm income picture during a telephone technical briefing held Monday morning to discuss two reports issued by the department – the farm income forecast and the medium term outlook report.
The official describes net farm income is a measure of the cash generated overall by Canadian farm businesses. It is money available to farmers to use as they choose, for example, to repay debt, invest or for other things.
For 2012, department officials are forecasting continued growth in farm income. Despite a projected pull back in grains and oilseeds prices, crop receipts are slated to climb slightly as planted acreage will increase and carry-in stocks are high, it says in the farm income forecast report. There will also be a small increase in livestock receipts. But high feed costs will restrain income gains for most livestock producers.
The farm income forecast, released annually, is a short-term outlook for the entire industry and each sector. The official says it’s the federal department’s measure of the financial strengths of the farming sector and its contribution to the Canadian economy. The medium term outlook is a projection of how current policy and market conditions influence farm incomes over time. Many of the factors currently influencing farm income will continue to be felt over the next 10 year, including a continued increase in the world demand for feed grains, rising petroleum prices, slow to moderate growth in the Canadian population and a Canadian dollar near par with the American dollar.
For 2011, average net operating income per farm will be $65,129, while for 2012 it’s projected to be $63,500. Net operating income is an estimate of the profit or loss of an individual farm operation, she says. The 2011 figure is 11 per cent higher than 2010 levels and 16 per cent higher than the average for the previous five years.
One of the other two other key measures of farm economic strength outlined in the report is net worth; assets minus liabilities. The net worth of the average Canadian farm is forecast to grow by five per cent in 2011 to reach $1.6 million and another five per cent in 2012, hitting $1.7 million.
The other key measure is farm families’ average total income, including all farm and non-farm income sources. In 2011, that’s projected to hit almost $119,000 or 11 per cent higher than 2010.
Despite difficult growing conditions last year in parts of the country and higher operating expenses driven by fertilizer, fuel and feed costs, there was an overall increase in farm income because of higher prices for hogs and grains and oilseeds, the report says. Disaster assistance and production insurance payments to Prairie farmers also contributed to income levels.
Canadian Federation of Agriculture president Ron Bonnett says from a financial perspective things are looking fairly sound for farmers.
In some areas there are going to be some fairly huge increases in farm income. “I know the livestock sector has had quite a turnaround, particularly in the beef sector where prices are quite a bit higher than they have been,” says Bonnett, noting he’s not surprised the federal agriculture department’s figures are showing a fairly substantial increase.
Bonnett says the figures showing increased net worth can be partly attributed to increases in land values. BF