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Farm cash receipts

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The Daily


Monday, February 25, 2008
January to December 2007

Market cash receipts for farmers hit a record high in 2007, boosted primarily by a surge in grain and oilseed prices. Dairy, poultry and egg producers received higher revenues. Meanwhile, cattle and hog farmers were squeezed by a combination of lower prices, higher feed costs, and the higher Canadian dollar.

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Canadian farmers received a record $36.3 billion from the sale of crops and livestock in 2007, up 12.2% from 2006. This total was 14.9% above the previous five-year average. This period included the bovine spongiform encephalopathy (BSE) situation and some years of low commodity prices.

Receipts from crop sales hit a record $18.1 billion, up 25.0% over 2006 and 29.1% higher than the previous five-year average. Although grain and oilseed prices were the driving force for the increase, deliveries were strong as a result of producers drawing on their stocks to benefit from the high prices.

Livestock receipts grew 1.7% to $18.1 billion, the result of higher dairy and poultry prices and increased marketings. Cattle and hog revenues declined in the wake of lower prices, while exports of live animals to the United States climbed as the economics of feeding these animals supported this movement. Livestock revenues were 3.5% above the previous five-year average.

Program payments amounted to $4.1 billion, a 9.7% decline from 2006 and 9.5% below the previous five-year average. This was due in part to improved prices in the grains and oilseeds sector.

Total farm cash receipts, which include crop and livestock revenues plus program payments, reached a record $40.4 billion in 2007. This level was 9.5% above 2006 and 11.8% higher than the five-year average. It was the first time that receipts surpassed the $40-billion mark.


Note to readers

Statistics Canada does not forecast farm cash receipts. These data are based on survey and administrative data from a wide variety of sources.

Farm cash receipts measure the gross revenue of farm businesses in current dollars. They include sales of crops and livestock products (except sales between farms in the same province) and program payments. Receipts are recorded when the money is paid to farmers before any expenses are paid.

Deferments represent sales from grains and oilseeds delivered by western producers, for which payments were deferred until the next year. Because these receipts are based on physical deliveries, any deferred payments are deducted from the farm cash receipts of the current calendar year and included when they are liquidated (see "liquidations of deferments" in the farm cash receipts table).

Program payments include payments tied to current agricultural production and paid directly to farmers. However, the series does not attempt to cover all payments made to farmers, nor does it represent total government expenditures under all assistance programs. For example, the Canadian Farm Families Options Program announced in July 2006 is not included because it has been determined not to be business income for statistical purposes.

As a result of the release of data from the 2006 Census of Agriculture on May 16, 2007, estimates of farm cash receipts, operating expenses, net income, capital value and other data contained in the Agriculture Economic Statistics series are being revised, where necessary. The complete set of revisions will be released in The Daily in November 2008.


Farm cash receipts increased in all provinces except Prince Edward Island and New Brunswick, where they declined, and in Nova Scotia and British Columbia, where they remained stable. Gains ranged from 3.9% in Ontario to 18.0% in Manitoba.

First economic indicator

Farm cash receipts are the first economic indicator available from Statistics Canada for the agriculture sector. They measure gross revenue for farm businesses only. They do not represent farmers' bottom line, as farmers have to pay their expenses, loans, and cover depreciation. Statistics Canada is scheduled to publish preliminary estimates of net farm income for 2007 on May 26, 2008.

While prices for grain and oilseed producers rose substantially in 2007 from low levels, inputs also increased. For example, the Industrial Product Price Index indicated that Canadian fertilizer prices rose 20.8% in 2007. In addition, livestock producers faced much higher feed costs. For instance, feed barley prices were 63.0% higher than in 2006.

Both farm cash receipts and operating expenses can vary widely from farm to farm because of several factors, including commodities, prices, weather and economies of scale.

In addition, a rapidly appreciating Canadian dollar against the US dollar has the impact of lowering returns to Canadian producers who depend heavily on international sales. The value of the Canadian dollar increased by more than 17% against its American counterpart during 2007.

High grain and oilseed prices push crop receipts to double-digit increase

Grain and oilseed prices have been increasing since the fall of 2006, boosted by expansion in the bio-fuel sector. Since that time, weather-related production issues in many of the world's major producing countries have tightened supplies, pushing prices to levels not seen in recent years.

Revenues from wheat (excluding durum) rose 43.4% to a record $3.2 billion in 2007. Durum receipts climbed to $962 million, up 68.2% from 2006. In both cases, the increase was the result of higher prices and Canadian Wheat Board payments, as marketings were down.

Barley receipts climbed to $793 million in 2007, the highest level since 1997 and an increase of almost 80% over 2006. This rise was supported by record prices and strong deliveries, especially in the fourth quarter, as producers harvested an above-average crop in 2007.

Canola revenues, which accounted for almost one-fifth of the overall crop receipts, hit a record $3.4 billion, up 37.0% from 2006.

Soybean revenues reached a record high of $1.0 billion, a 49.3% gain from 2006. This surge was the result of a 25.7% rise in prices and 18.7% higher deliveries.

The increasing use of corn in ethanol production drove prices 29.7% over 2006 levels, while a record crop in 2007 helped boost revenues to a record $1.0 billion.

Increases in supply-managed sectors support livestock receipts

Supply-managed commodities (dairy, poultry and eggs), which made up 43% of total livestock revenues, were the main force behind the 1.7% increase in livestock receipts in 2007.

Supply-managed revenues reached $7.9 billion, up 8.6% over 2006, the largest increase in the last 10 years.

Receipts for cattle and hog producers were adversely affected by the combination of reduced prices resulting from the appreciation of the Canadian dollar and higher feed costs. With more animals shipped south of the border for cheaper feeding, domestic slaughter decreased.

Cattle and calf revenues decreased 2.8% to $6.2 billion in 2007, as both prices and marketings declined. Despite higher receipts from the export of live animals, lower domestic slaughter and interprovincial trade pulled down overall cattle and calf receipts.

Receipts from cattle and calf slaughter, which accounted for almost two-thirds of the total, fell 6.0%, largely the result of reduced marketings. Revenues from interprovincial trade declined 20.9% as both marketings and prices fell. The dramatic rise in feed costs put downward pressure on feeder cattle prices.

Exports of live cattle and calf to the United States have been rising rapidly since the border was reopened in July 2005. Exports jumped over 35% in 2007 to 1.4 million head. Even so, exports remained well below the pre-BSE level of 1.7 million head in 2002.

Hog receipts fell 2.5% in 2007 to $3.3 billion, the result of lower prices. Marketings were up 1.0%. Prices were pressured mainly by a rising Canadian dollar, higher feed costs and ample supplies. Slaughter hog receipts, which accounted for about 80% of total hog revenues, fell 5.4% to $2.6 billion as both prices and marketings declined.

Farmers continued to export hogs to the United States at a record pace. Exports amounted to 9.9 million animals during 2007, surpassing the previous record set in 2006.

Program payments decreasing

The decrease in program payments can be primarily attributed to the phasing-out of the Grains and Oilseeds Payment Program. As a new program in 2006, it delivered $747 million over the course of the year. However, in 2007, it delivered only $7 million as it wound down.

Payments under the Canadian Agricultural Income Stabilization program (CAIS) and CAIS-related programs declined 10.1% to $1.7 billion in 2007.

Cushioning the decrease, payments made under the Cost of Production Payment totalled $319 million. Provincial stabilization and crop insurance payments, to which producers contribute through premiums, both increased. Stabilization payments rose largely because of higher payout made to hog producers in Quebec.

Available on CANSIM: tables 002-0001 and 002-0002.

Definitions, data sources and methods: survey numbers, including related surveys, 3437 and 3473.

A data table is also available from the Summary tables module of our website.

To order data, contact Client Services (toll-free 1-800-465-1991; fax: 613-951-3868; agriculture@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Gail-Ann Breese (204-983-3445; gail-ann.breese@statcan.gc.ca) or Bernie Rosien (613-951-2639; bernie.rosien@statcan.gc.ca), Agriculture Division.

Tables. Table(s).