Net farm income slips in 2009: StatsCan

Realized net farm income, the difference between a farmer’s cash receipts and operating expenses minus depreciation, plus income in kind, fell 11.2 per cent to $3.3 billion in 2009, according to Statistics Canada.

It was the first decrease since 2006 and was the result of declining program payments, grain, cattle and hog receipts, and increases in depreciation charges, the federal statistics agency said in a release last week.

Provincially, realized net income fell in Nova Scotia, Quebec, Ontario and Alberta. In all four, a drop in farm cash receipts exceeded declines in expenses.

Market receipts (revenues from the sale of crops and livestock) declined by 1.2 per cent to $41.3 billion in 2009. A small increase in crop receipts was not sufficient to offset declines in livestock receipts.

Livestock receipts fell 4.7 per cent to $18 billion, as the number of both cattle and hogs exported in 2009 declined by over 30 per cent from 2008 levels.

Crop receipts edged up 1.7 per cent to $23.3 billion. The receipt by producers of $1.4 billion in deferred 2008 grain revenue, together with increased receipts from the greenhouse and nursery sector and lentil production, helped offset the impact of lower grain and oilseed prices.

In total, farm cash receipts, including both market receipts and program payments, fell by three per cent to $44.6 billion in 2009. A 20.6 per cent decline in program payments accounted for over one-half of this decrease.

Total farm expenses, which include total operating expenses and depreciation, fell 2.3 per cent in 2009 to $41.3 billion, the first decrease since 1986. It followed increases of 9.1 per cent in 2008 and 7.6 per cent in 2007.

Declines in fuel and interest expenses more than offset a 5.3 per cent increase in depreciation charges. Both building and machinery depreciation increased at similar rates.

Total farm expenses were down in all provinces in 2009 except Newfoundland and Labrador, Prince Edward Island and New Brunswick.

Total net income amounted to $2.9 billion in 2009, down from $6.9 billion in 2008.

“Total net income” adjusts realized net income for changes in farmer-owned inventories of crops and livestock. It represents the return to owner’s equity, unpaid labour, management and risk.

Reductions in the stocks of most major grains, together with declining livestock inventories, resulted in a $351 million drop in the value of inventories in 2009. This decrease followed a $3.2 billion increase in 2008, when record yields for many crops boosted production, leading to above-average, year-end stocks.

Agriculture’s net value added fell by $4.5 billion to $11.3 billion in 2009, after increasing by $6 billion in 2008. The decline in 2009 was due primarily to a drop in the total value of production. Newfoundland and Labrador, P.E.I., New Brunswick and British Columbia were the only provinces to record increases in net value added in 2009.

Note: Realized net income can vary widely from farm to farm because of several factors, including commodities, prices, weather and economies of scale. This and other aggregate measures of farm income are calculated on a provincial basis employing the same concepts used in measuring the performance of the overall Canadian economy. They are a measure of farm business income, not farm household income.

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