Agriculture Canada is projecting record high farm income in 2023, but with a softening in 2024.
In a release Friday, Ag Canada pegged 2023 nationwide farm net cash income at $24.8 billion, a 13% increase from the previous year. Net cash income – the primary metric Ag Canada uses to measure farm income – represents the difference between cash receipts and operating expenses at the industry level.
“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,” Ag Canada said
For 2024, net cash income is forecast to decline 14% to $21.3 billion, although that would still be 28% above the 2018-2022 average.
Statistics Canada has not yet released its full 2023 farm income report, although the federal agency said in November that farm cash receipts – combined crop, livestock, and program payments – through the first three quarters of the year amounted to $72.5 billion, up almost 8% from the same period in 2022.
Ag Canada said its expectations for an increase in 2023 farm income are primary based on higher livestock receipts, largely due to strengthening cattle prices amid declining herds in both Canada and the US. Supply management receipts for 2023 are also projected higher, although a drop is forecast for hogs
Crop receipts are expected to have seen a smaller increase in 2023, as increased grain marketings were largely blunted by a decline in prices, Ag Canada said. Program payments are projected to fall from record high levels in 2022, mainly due to lower AgriInsurance payments, but would still be historically high.
On the other side of the ledger, Ag Canada said the increase in 2023 farm operating expenses is expected to be more moderate compared to recent years, as prices for key inputs, such as fuel and fertilizer, fell from recent highs seen in 2022 in the wake of Russia’s war on Ukraine. At the same time, other expenses, such as interest payments, are forecast to have continued rising.
Average net operating income per farm, which measures producers’ revenue minus cash expenses at the farm level, is also forecasted to have increased in 2023, up 17% from a year earlier to $155,000, and 34% above the previous five-year average.
Average farm family income is forecast to have increased by 11% to $239,000 in 2023, while average net worth is projected to have climbed 4% to $3.9 million.
Looking ahead to 2024, Ag Canada said its farm income forecast is subject to “several uncertainties due to continued volatility in global markets, as well as the potential impact of weather events.”
Regardless, declining crop receipts and only slight growth in livestock receipts are not expected to offset a modest increase in operating expenses, resulting in the expected 14% drop in net cash income. Net operating income is also expected to suffer in 2024, sliding 13% to $134,000 per farm, Ag Canada said.
