We feared the worst for the farm sector at the start of the pandemic, but 2020 ended on a positive note for Canadian agriculture. Statistics Canada’s estimates revealed Farm Cash Receipts (FCR) increased by 8.1% to $71.7 billion in 2020 (+5.7% excluding cannabis). Total crop receipts increased by 14.2% to $41.9 billion (+10.2% excluding cannabis). It was more difficult in the livestock sector as receipts declined 0.8% to $26.4 billion. FCR were up for chicken (0.8%), hogs (1.5%), and dairy (1.9%) but down for cattle (-4.9%) and turkey (-4.2%).
Our 2021 FCR forecasts outline a positive outlook for revenues in Canadian agriculture along with a few risks and headwinds in some sectors.
Strong prices to lift receipts for grains, oilseeds and pulses
Table 1 presents estimates of production volumes (crop-year basis) prices and FCR (calendar year basis) for Canada’s main crops. Production estimates from Agriculture and Agri-Food Canada point toward lower production in 2021 for most crops except for barley, canola and soybeans, for which acreages are expected to increase. Futures signal strong prices for 2021, although they should decline following the harvest of the new crop.
We expect total FCR for the selected crops to grow an impressive 20% in 2021, driven by high crop price forecasts. But there exists downside price risk. Crop prices have been volatile lately and supported by strong import demand from China, which should not be taken for granted in today’s geopolitical climate.
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