The decrease represents the largest since 2006, Stats Canada said
By Diego Flammini
The Canadian ag industry experienced a significant financial hit last year.
Realized net farm income fell by 45.1 per cent in 2018 to a national total of $3.9 billion, a Statistics Canada report said.
Stats Canada defines realized net farm income as the difference between cash receipts and operating expenses, minus depreciation plus income in kind.
No matter the formula used to calculate farm income, figures have dropped substantially, said J.P. Gervais, chief agriculture economist with Farm Credit Canada.
“It’s not a rosier picture if you calculate net cash income (revenues minus operating expenses) because that’s down 21 per cent,” he told Farms.com.
The 21 per cent decrease is equal to about $3 billion and the industry hasn’t seen that kind of drop since 2011, Gervais said.
Many of the factors contributing to lower farm income are out of producers’ control.
Fuel expenses rose by 18.1 per cent in 2018 and overall farm expenses increased by 6.5 per cent, the Stats Canada report said.
Producers have also had to manage higher interest rates.
“We’ve had five interest rate increases from the Bank of Canada,” Gervais said. “Farmers are paying more for inputs which has resulted in lower profits.”
Farmers can, however, take some good news out of the Stats Canada report.
Gross revenues have been holding up. The challenge now for producers is controlling operating costs, Gervais said.
“It’s not easy because farmers don’t have complete control over those costs and are exposed to market fluctuations,” he said. “In order to protect profits, we’re going to have to be really careful about costs.”
Other takeaways from the report include an 8 per cent increase in cash wages and an increase in total national cannabis revenue from $189 million in 2017 to $564 million in 2018.