Agriculture and Agri-Food Canada has completed its farm income forecast for 2023 and 2024, with results showing that overall Canadian farm income is expected to have reached a new record in 2023, according to a release.
Despite facing various challenges such as droughts in western Canada, extreme weather events, Russia’s ongoing conflict with Ukraine, and other global tensions, the agriculture sector demonstrated robust economic performance throughout 2023. Each farm may have encountered the past year differently due to its unique circumstances, the release states this continued growth of overall farm income shows that despite the uncertainty and volatility of the past year, the sector remains resilient.
In 2023, Net Cash Income (NCI), the primary metric utilized by Agriculture and Agri-Food Canada to gauge farm income, is projected to have surged by 13 per cent, reaching a historic high of $24.8 billion. Although the growth in both expenses and receipts was anticipated to be considerably more restrained compared to the trends witnessed in 2021 and 2022, the increase in receipts for 2023 is expected to have exceeded that of expenses, consequently setting a new record for NCI.
Crop receipts are estimated to have increased by 4 per cent, amounting to $56.0 billion, primarily due to enhanced grain marketings that largely offset the impact of declining prices. Operating expenses are expected to have risen by only 2 per cent to $74.9 billion, significantly lower than the 20 per cent surge observed in 2022. While some key inputs, such as labour and interest expenses, are forecast to have continued increasing, others, such as fertilizer and fuel expenses, are expected to have come down.
The primary factor driving this anticipated rise is the projected increase in livestock receipts, nearly reaching 10 per cent to a total of $37.3 billion. Cattle receipts experienced significant growth due to price surges, which, when coupled with moderate gains from the supply-managed sector, more than compensated for an anticipated decrease in hog receipts.
Similar results are expected for average Net Operating Income (NOI) per farm, which is forecast to have increased by 17 per cent in 2023 to $155,000, compared to $132,000 in 2022. This rise represents a 34 per cent increase above the 2018-2022 average. The average farm family income, encompassing off-farm earnings, is predicted to have escalated by 11 per cent to $239,000 in 2023. Enhanced average NOI is foreseen across all farm types, excluding hog farms and poultry and egg farms.
However, NCI would still remain 28 per cent above the 2018-2022 average. Assuming a normal production year, crop receipts are expected to decline by 5 per cent as prices continue to decrease. While livestock receipts are forecasted to continue rising, the rate of growth is expected to slow down to 2 per cent, primarily attributed to a deceleration in cattle prices. Average farm-level and farm family incomes are anticipated to mirror the trend observed in the aggregate measures of income.
“The results of the farm income forecast show us just how resilient our sector is, with continued growth of overall farm income,” said Lawrence MacAulay, Minister of Agriculture and Agri-Food.
Looking ahead to 2024, the release notes NCI is forecast to decline 14 per cent to $21.3 billion, as cash receipts are forecast to fall slightly with expenses modestly increasing, although NCI would still be 28 per cent above the 2018-2022 average. Assuming a normal production year, crop receipts are expected to decline by 5 per cent as prices continue to decrease. While livestock receipts are forecasted to continue rising, the rate of growth is expected to slow down to 2 per cent, primarily attributed to a deceleration in cattle prices. Average farm-level and farm family incomes are anticipated to mirror the trend observed in the aggregate measures of income.
Statistics Canada will be releasing fourth quarter receipts for 2023 on February 29, 2024, and estimates of farm income for 2023 on May 29, 2024. Agriculture and Agri-Food Canada’s next forecast will build on these releases and provide an updated forecast for 2024, as well as a new forecast for 2025.
