Farm business cash flows

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Cash income for Canadian farm businesses increased by 14.0% or $1.5 billion to $11.9 billion in 2010 compared with 2009. This followed a 3.0% drop in 2009.

The improved cash flow situation in 2010 was partly attributable to higher livestock receipts, the result of rising hog and cattle prices. In addition, farm operating expenses fell for the second consecutive year as costs declined for fertilizer, feed and pesticides.

The cash flow account is a summary of cash flow in and out of farm businesses over the calendar year.

Cash sources amounted to $46.9 billion, largely unchanged from 2009, while cash uses fell by more than $1 billion to $35.0 billion, marking the second consecutive decrease.

The five main components of cash sources are sales of primary production, sales of secondary production, program payments, government rebates, and other cash income. The term "cash uses" covers expenses on inputs, business taxes, interest, cash wages to hired labour and cash rent to non-operators.

Cash income increased in most provinces in 2010, with Saskatchewan and Ontario as the top movers. In Alberta, decreases in cash sources exceeded declines in cash uses, resulting in lower cash income in 2010.

Cash available to producers through borrowing rose in 2010 as both current and long-term liabilities increased. There was a net increase of $2.8 billion in loans outstanding in 2010, compared with a $1.9 billion net increase in 2009.

The ratio of loans outstanding to cash income, which reflects the burden of farm debt on farm cash income, fell to 4.1 in 2010 from 4.4 in 2009. This means that for every $100 in income in 2010, producers had a debt load of $410, compared with $440 in 2009.

Note: While similar to the "Farm income" data released on May 25, 2011 in The Daily, the cash flow account is a summary of cash flow in and out of farm businesses over the calendar year. The basic function of the account is to provide information on the financial position of farm establishments (that is, the amount of cash available to farm establishments to meet current obligations). Specifically, only cash flow pertaining to farm operators is included. Cash income and expenses of non-operator landlords and the personal portion of households are excluded.

Preliminary farm business cash flow data for the previous calendar year are first released in June of each year (six months after the reference period), providing timely information on the performance of the agriculture sector. Revised data are then released in January of each year, incorporating data received too late to be included in the first release.

This series does not include data on depreciation, which are available in the publication Farm Operating Expenses and Depreciation Charges: Agriculture Economic Statistics (21-012-X, free).

Available on CANSIM: table 002-0023.

Definitions, data sources and methods: survey number 5031.

The publication Farm Business Cash Flows: Agriculture Economic Statistics, June 2011, Vol. 10, no. 1 (21-018-X, free), is now available online. From the Key resource module of our website under Publications, choose All subjects, then Agriculture.The publication, Balance Sheet of the Agricultural Sector: Agricultural Economic Statistics, June 2011, Vol. 10, no. 1 (21-016-X, free), is also available.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Russell Kowaluk (613-951-0600; russell.kowaluk@statcan.gc.ca), Agriculture Division.