January-September Farm Cash Receipts Higher but Drought Impact Looms

The good times continued to roll for Canadian farmers through the first three quarters of this year, but the full financial impact of the Prairie drought still looms ahead.

National farm cash receipts totalled $58 billion in the January-September period, according to a Statistics Canada farm income report released Tuesday. That is up 11% or $5.8 billion from the same time in 2020.

The strong financial performance through the first three quarters of 2021 follows on the heels of an extremely good year for producers in 2020, when realized net farm income (the difference between cash receipts and operating expenses, minus depreciation, plus income in kind) jumped 84.4% to $9.4 billion. However, amid sharply reduced yields and skyrocketing feed prices resulting from this summer’s drought across much of Western Canada, StatsCan warned upcoming farm income reports will not look as rosy. Farm operating expenses have climbed as well.

Crop receipts through the first three quarters of this year - which are based on strong 2020 production rather than this year’s poor crop - were up 9.6% to $33.5 billion. January-September livestock receipts were higher as well, rising 14.8% to $22.1 billion. Meanwhile, total direct payments remained unchanged from the first three quarters of 2020, at $2.4 billion.

The rise in January-September crop receipts was led by canola, with returns up $1.3 billion from the same period last year and representing almost half of the increase in total crop receipts for the period. Canola prices jumped almost 41%, more than offsetting a 16.3% decline in total marketings through the first three quarters of the year, StatsCan said.

Also boosted by strong prices, total wheat receipts were up $1.1 billion compared to the same three quarters a year ago, grabbing almost 40% of the increase in total crop receipts.

On the other hand, soybean receipts for the January-September period were down 26.4% amid higher prices but lower marketings (-42.5%). Specialty crop receipts were lower too, falling by 3% to $2.5 billion from the first three quarters of 2020, as lentils and mustard more than offset small gains elsewhere in the pulse and special crop family.

Despite rising prices (+30.2%) lentil receipts dropped by 15.1% to $1.1 billion as marketings tumbled almost 35%. The receipts were down slightly from the record high in the first three months of 2020. Mustard receipts slipped 3.2%.

Cannabis receipts rose 6% to $2.3 billion in the first three quarters of 2021, representing 7% of total crop receipts. Excluding cannabis, crop receipts for the January-September period would have risen 9.9%.

As for livestock, half of the total increase for the January-September period is attributable to hog returns, which increased $1.5 billion. The remaining increase in receipts comes from slaughter cattle (+$699.1 million) and supply managed ($644.5 million).

Slaughter hog receipts for the first three quarters of the year jumped 38.3% to $4.2 billion on the strength of high prices (+37.1%). Domestic and international demand, coupled with high feed prices, have resulted in extremely high prices for hogs, StatsCan said.

Total cattle receipts were up 9.7% to $6.9 billion, mostly due to slaughter cattle receipts which were 15.1% higher. Slaughter cattle receipts higher, reflecting both increases in the number of animals slaughtered and prices, which offset the decreases in international export of cattle where the number of cattle and prices fell.

Receipts for supply managed commodities increased 7.5% to $9.3 billion.

In terms of government payments, drops in provincial stabilization payments (-$180 million), crop insurance (-$116.3 million) and livestock insurance (-$115.4 million) were offset by an increase in the Dairy Direct Payment Program (+$413.9 million).