Reuters — Canadian farm incomes look set to fall in 2016 after a year of record profits, but will still reach above-average levels, according to a report from the federal government.
Rising receipts for crops and livestock have boosted incomes in recent years, due to greater demand in developing countries and a weak Canadian dollar, a report from Agriculture and Agri-Food Canada said Friday. Lower crude oil prices have also cut farmers’ expenses.
Net cash income in 2016 should fall nine per cent to $13.6 billion, from a record-high $15 billion last year. The earnings for 2016 would be 14 per cent higher than the average from 2010 to 2014.
Average net worth per Canadian farm is expected to reach $2.7 million this year, the report said, and total farm family income, which has been “rising steadily,” is expected to reach an average of $136,900 per farm family.
Livestock and crop receipts in Canada for 2015 are each expected to increase by two per cent to $26.2 billion and $30.7 billion in 2015, respectively. The report also predicts crop receipts in 2016 to slip very slightly to $30.6 billion.
U.S. farmers, who have been hurt by a strong U.S. dollar that has crimped exports, are in worse shape.
The U.S. Department of Agriculture forecast the nation’s net farm income at US$54.8 billion in 2016, down from $123.3 billion in 2013, when corn prices reached record highs.
For the near term, grain prices look likely to remain under pressure due to ample global stocks, while expansion of the U.S. livestock sector weighs on prices of cattle and hogs, the Canadian report said.
Several years of strong conditions in Canada were seen as contributing also to a decline in program payments in 2015, down to $2.1 billion.
Canada is the world’s biggest exporter of canola and second-largest shipper of wheat.
Farmers’ income is a measure of their spending power on crop inputs such as seed, fertilizer and chemicals, as well as tractors and other field equipment.
Deere and Co., the maker of John Deere tractors, cut its fiscal-year outlook and reported lower quarterly earnings on Friday as U.S. farmers’ declining income weakened demand for agricultural equipment.
— Reporting for Reuters by Rod Nickel in Winnipeg; additional reporting by Meredith Davis in Chicago. Includes files from AGCanada.com Network staff.