Statistics Canada is reporting last year’s 45.1 per cent decrease in realized net farm income (to $3.9 billion) as the largest since 2006.
Realized net income is the difference between a farmer’s cash receipts and operating expenses, minus depreciation, plus income in kind.
The attribution for the steep decline includes rising feed, interest and labour costs together with little change in farm cash receipts.
Looking across Canada, realized net income dropped in every province aside from New Brunswick, which had a 7.2 per cent increase as a result of an increase in cannabis and potato production. According to StatsCan, more than one-third of the national decrease was attributable to a 68.1 per cent decline in Alberta.
In regards to total net farm income, there was a decline of $5.2 billion to $3 billion in 2018.
Total net farm income is calculated by taking the realized net income and adjusting it for changes in the farmer-owned inventories of crops and livestock.
All provinces recorded declines in this area due to lower on-farm stocks of barley, corn, wheat (excluding durum) and soybeans, as well as decreased cattle and calf inventories which contributed to the drop in the value of inventory change, according to StatsCanada.
Substantial increase in farm expenses
According to the site, after rebates, farm operating expenses increased 6.5 per cent last year to $50.6 billion, which is the largest percentage increase in six years. Feed costs were also up by 9.6 per cent, largely due to rising prices as feed grain supplies were tight prior to harvest.
The increase in prices pushed machinery fuel expenses up 18.1 per cent in 2018.
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