Canadian farm sector income expected to reach new records

Agriculture and Agri-Food Canada (AAFC) 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 AAFC, the agriculture sector continued to show very strong overall economic performance in 2023, despite numerous challenges, including droughts in western Canada and other extreme weather events, Russia’s continuing war on Ukraine, and other global conflicts. While every farm is unique and will have experienced the last year differently, this continued growth of overall farm income shows that despite the uncertainty and volatility of the past year, the sector remains resilient.

For 2023, Net Cash Income (NCI), the main metric AAFC uses to measure farm income, is forecast to have increased 13 per cent to a new record of $24.8 billion. While growth in both expenses and receipts is forecast to have been much more modest than what was seen in 2021 and 2022, growth in receipts for 2023 is still forecast to have outpaced that of expenses, resulting in a new record for NCI.

The largest driver of this expected increase is a forecasted increase in livestock receipts of almost 10 per cent, to $37.3 billion. Cattle receipts saw impressive price-driven growth that, combined with moderate growth in receipts from the supply-managed sector, more than offset an expected decline in hog receipts.

Crop receipts are also forecast to have grown four per cent to $56.0 billion, as improved grain marketings have largely mitigated the impact of declining prices. Operating expenses are forecast to have increased only 2 per cent to $74.9 billion, well below the 20 per cent increase seen 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.

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 increase is 34 per cent above the 2018-2022 average. Average farm family income, which includes income earned off-farm, is forecast to have increased by 11 per cent to $239,000 in 2023. Increases in average NOI are expected for all farm types except for hog farms and poultry and egg farms.

Lawrence MacAulay, Minister of Agriculture and Agri-Food Canada, says the results of the farm income forecast shows how resilient the agriculture sector is, with continued growth of overall farm income.

“As Minister of Agriculture and Agri-Food Canada, I recognize the vitally important role our farmers play in growing the economy and sustaining our country, and I will continue to do everything I can to support them,” says Minister MacAulay.

Looking ahead to 2024, 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. Under the assumption of a normal production year, crop receipts are expected to decline 5 per cent as prices continue to fall. Livestock receipts are forecast to continue increasing, but at a much less aggressive rate of 2 per cent, as growth in cattle prices is forecasted to slow down. Average farm-level and farm family incomes are expected to follow a similar trend to 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. AAFC’s next forecast will build on these releases and provide an updated forecast for 2024, as well as a new forecast for 2025.