Farm operating revenues and expenses, 2019 (revised data)
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Released: 2021-03-26
Canadian farmers faced another challenging year in 2019, as increased import restrictions from China largely affected soybean, canola, pork and beef producers.
Average operating expenses per farm rose 4.2% to $431,635 in 2019, once again outpacing average operating revenues, which were up 3.0% to $507,687. As a result, the average net operating income fell 3.3% to $76,052 in 2019.
The gain in average operating revenues was due to higher revenues from total livestock and products, and program payments and insurance proceeds, which offset lower revenues from crops—namely canola and soybeans. Production costs were up, mainly because of higher costs of interest, fertilizers, seeds and plants, custom work and feed.
Chart 1
Average operating revenues, by farm type, Canada, 2019
The average operating profit margin—the ratio of net operating income to operating revenues—stood at 15.0 cents per dollar of revenue in 2019, down from 16.0 cents in 2018.
Crop revenues accounted for 46.7% of all operating revenues earned by Canadian farms in 2019, down 1.7 percentage points from 2018, while livestock revenues accounted for 41.9%, up 0.8 percentage points. The remainder came from program payments and insurance proceeds, as well as from other revenues, such as custom work and machine rental.
Potato farms post the highest average operating profit margin among farm types
Over half of the 11 major types of farms posted operating profit margins above the national average (15.0 cents per dollar of revenue) in 2019. Potato farms ranked first at 21.3 cents per dollar of revenue, up from 19.8 cents in 2018. Oilseed and grain farms slipped to second place at 19.5 cents, down from 22.1 cents. Farms specializing in dairy cattle, other crops, vegetables, or poultry and eggs also had average operating profit margins above the national average.
Chart 2
Average operating profit margin, by farm type, Canada, 2018 and 2019
The increased operating profit margins for potato farms were largely caused by higher prices, as poor harvest conditions in 2018 tightened supplies and depleted stocks in advance of the 2019 harvest.
Oilseed and grain farms report a lower rate of return than in the previous year
In 2019, oilseed and grain farmers reported a lower rate of return compared with 2018, because of a decrease in average operating revenues (-0.8% to $456,758) and an increase in average operating expenses (+2.4% to $367,464). Lower revenues from canola and soybeans more than offset the increase in barley, oats, wheat and corn revenues.
Average canola revenues for oilseed and grain farms fell 8.1%, as prices declined by almost 10% in 2019, in the wake of Chinese import restrictions on Canadian canola seed, which started in early March 2019. According to data on Canadian international merchandise trade, canola exports to China—the largest importer of Canadian canola seed, oil and meal—dropped 70.5% from 2018 to $822.3 million in 2019. In 2018, 48.0% of Canadian exports of canola were destined for the Chinese market, compared with 19.5% in 2019. Nevertheless, marketings were up, as domestic seed crushing hit record highs and lower prices boosted exports to other countries.
Average soybean revenues for oilseed and grain farms decreased by 12.6% on lower marketings and prices. Ample global supplies throughout 2019, along with the US–China trade dispute, pushed down prices. Exports to China—the largest export market for Canadian soybeans—decreased sharply after a record year in 2018, amid tense relations between the two countries and lower feed demand from Asia, where an outbreak of African swine fever reduced herd sizes.
Hog farms report the largest growth in profit margins among livestock farms
Hog farms posted the highest average operating revenues nationally at $2.2 million, while their average operating expenses totalled just over $2.0 million in 2019. As a result, the industry's average operating profit margin recorded the largest increase among livestock farms, rising 1.5 percentage points from 2018 to 9.1 cents per dollar of revenue in 2019. Still, this was the second-lowest average operating margin among all farm types.
Average hog revenues for these farms rose 5.9% on the strength of a hike in prices. Higher prices reflected the increased demand for North American pork exports in the wake of the African swine fever outbreak that reduced domestic supply in China and other East Asian countries in 2019.
Despite the import sanction imposed by China in June 2019, Canadian pork exports were flat in 2019. Canadian pork producers offset some of their lower exports to China with increased exports to other international markets, including the United States, Japan and Mexico.
Among the other livestock farm types, only dairy farms saw their profit margin increase.
Beef cattle farms maintain the lowest average operating profit margins
Higher average operating revenues from cattle sales and custom work combined drove average operating revenues of beef cattle farms up 5.7%. Despite market access issues to China in the second half of 2019, Canadian beef exports rose, supported by higher beef production. Strong global demand for beef and lower cattle inventories in the United States helped to push export marketings up.
Average operating expenses were up 6.3%, resulting in an average operating profit margin of 5.7 cents per dollar of revenue, down from 6.2 cents in 2018. The increase in operating expenses was largely explained by higher cattle purchases and feed, and general expenses, mainly custom work and net interest. Beef cattle farms maintained the lowest profit margin of all farm types, well below the national average.
The Prairie provinces post the largest declines in average operating profit margin
The three Prairie provinces registered the most significant decreases in operating profit margin in 2019: Manitoba (-2.4 percentage points), Alberta (-1.9 percentage points) and Saskatchewan ( -1.8 percentage points). Newfoundland and Labrador also reported a lower rate of return.
Chart 3
Average operating profit margin, by province, 2018 and 2019
The decline in Manitoba was largely attributable to grain and oilseed farms, whose rate of return declined by 5.0 percentage points from 2018 to 17.8 cents per dollar of revenue.
In Saskatchewan, the lower profitability of farms in 2019 reflected a decrease in the rate of return for all farm types, except hog farms. Oilseed and grain farms, which accounted for almost 65% of the farms in this province, posted a 2.3 percentage point decline in operating profit margins.
In Alberta, the weaker performance of farms was mainly because of lower returns for grain and oilseed, and beef cattle farms.
Prince Edward Island posted the highest average operating profit margin, at 19.1 cents per dollar of revenue, followed by Saskatchewan at 18.0 cents.
Nova Scotia registered the largest growth in operating profit margin (+3.2 percentage points).
Note to readers
The Agriculture Taxation Data Program uses taxation records to produce detailed data for Canada and the provinces on operating revenues and expenses for the agriculture sector. The target population consists of all unincorporated and incorporated farms and communal farming organizations in Canada. Since reference year 2017, partnerships filing a T5013 Partnership Information Return have been included in the incorporated sector. Prior to 2017, all farms that were members of a partnership were included in the unincorporated sector.
To allow for historical comparison, the estimates presented cover both incorporated farms and communal farming organizations with total farm operating revenues equal to or greater than $25,000, as well as unincorporated farms with total farm operating revenues of $10,000 and over.
Data for this series are subject to revision up to five years prior to the current reference year. Data for 2017 and 2018 have been revised.
In this release, average always refers to average per farm. Table 32-10-0136-01 also presents averages per farm reporting.
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