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Farmers’ net income up in 2007

Improved income from primarily crop-producing provinces carried the country’s farmers to an overall increase in realized net farm income in 2007.

So say the stats on farm income released Monday by Statistics Canada, pointing to realized net farm income of $2.2 billion, up $1.2 billion or 125.4 per cent from 2006 levels and a rebound from declines in 2006 as well as 2005.

Total net income — a measure that adjusts realized net income for changes in the value of farmer-owned inventories of crops and livestock — amounted to $1.2 billion in 2007, up from $129 million in 2006, despite declines in six provinces, StatsCan said. Net income improved in Quebec, Saskatchewan, Alberta and British Columbia.

Higher grain and oilseed prices more than offset increases in operating costs, the federal statistics agency said. However, many livestock producers were “adversely affected” by dropping prices, due to the rising Canadian dollar and higher feed costs.

Realized net farm income declined in several provinces as producers faced large increases in operating costs and declines in potato, hog and calf receipts. Market cash receipts — that is, revenues from the sale of crops and livestock — were up 12.9 per cent in 2007, with crop receipts up 25.3 per cent and livestock receipts 2.7 per cent, StatsCan said.

Grains and oilseed prices started to gain strength in 2006 with expansion in the biofuel sector. Weather-related production issues in several grain-exporting countries and increased international consumption resulted in tight worldwide supplies in 2007. Grains and oilseed producers benefited from marked improvement in prices in 2007, which rose to levels not seen in several years.

But cattle and hog prices fell 2.4 per cent and 4.2 per cent respectively, resulting in a 0.6 per cent drop in farm cash receipts for cattle and a 2.4 per cent drop for hogs.

Helping to offset the decline in livestock receipts, however, were gains in the supply-managed sector (poultry, eggs, dairy). Much of the growth for these commodities was driven by price increases as production costs, including feed, continued to rise, StatsCan said.

Overall, StatsCan said, producers saw their operating costs rise, as feed and fertilizer expenses climbed 20.1 and 21.8 per cent respectively, while machinery fuel costs rose 5.6 per cent.

Provinces’ gains

Both realized and total net ag income were down across Atlantic Canada in 2007 compared to 2006. Quebec posted increases in both realized and total net income, at $660 million and $744 million respectively. Ontario’s realized net ag income rose to $219 million, but total net income dropped from zero in 2006 to $102 million in the red in 2007.

Further west, Manitoba also saw a substantial rise in realized net income, to $337 million, but took a devaluation of minus $62 million on inventory, for lower total net income of $276 million. Saskatchewan’s realized and total net income rose to $847 million and $535 million respectively, as the province took a devaluation of minus $312 million on inventory.

Alberta’s realized net income rose to $176 million, and total net income also rose, albeit to $119 million in the red. B.C.’s realized net dropped, but the province saw a smaller devaluation of inventory than others, improving its total net income slightly to $120 million in the red.

Farm cash receipts for 2008

Also on Monday, StatsCan released its third-quarter preliminary figures for farmers’ market receipts — a measure of gross revenue for farm businesses before expenses or depreciation — from the sale of crops and livestock. That figure totalled $30.5 billion between January and September 2008, up 13.6 per cent from the first nine months of 2007.

Receipts for crop producers rose 28.9 per cent to $16.8 billion, StatsCan said. due to higher prices resulting from tight world grain supplies and strong demand. Average price increases ranged from 20 per cent for oats to almost 200 per cent for durum wheat.

StatsCan noted, however, that while prices received by crop producers rose substantially, the prices of their inputs also increased. The Industrial Product Price Index indicated that Canadian fertilizer prices rose 53 per cent while diesel fuel increased 47 per cent during the first nine months of 2008.

Livestock receipts for the first nine months of 2008 fell 0.8 per cent from the year-earlier period, to $13.7 billion, StatsCan said. Lower prices drove down revenues for hogs sold for domestic slaughter and for export. Overall, hog receipts fell 11.5 per cent, while revenues for cattle and calf producers dropped 3.8 per cent, as a result of falling receipts from animals sent both for domestic slaughter and for feeding.

Both the hog and cattle sectors have been affected in recent months by several factors including not only rising input costs but a strong Canadian dollar and the implementation in late September of mandatory country-of-origin labelling in the U.S., with its uncertain effect on the marketplace. A combination of these factors has exerted downward pressure on prices.

A 6.3 per cent increase in receipts from the supply-managed sector moderated the decline in livestock receipts, StatsCan said, noting supply-managed commodities account for more than 45 per cent of total livestock receipts. Poultry and egg receipts were up as a result of higher prices.

Adding in program payments, StatsCan said farmers’ revenues amounted to $33.6 billion between January and September 2008.

Among the provinces, the three Prairie jurisdictions saw the most substantial increases in ag cash receipts for the 2008 period compared to the same nine months in 2007. Saskatchewan, Alberta and Manitoba posted increases of 25.1, 18.4 and 12 per cent respectively, followed by Newfoundland and Labrador at 11.5 per cent.

Cash ag receipts in Nova Scotia and Quebec were up 7.4 per cent, with Ontario and B.C. both up 4.6 per cent. P.E.I. receipts dropped 6.2 per cent.

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