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Farmers have been seeing better prices for many commodities in recent years, and this is reflected in improving average revenues. At the same time, many of the major expenses of farming have moderated. However, the gains in profits are concentrated among Canada's highest-revenue farms.

Prices and cash receipts

Farm cash receipts for Canadian farmers were up 11.2% to $49.4 billion in 2011 from 2010. The increase follows consecutive declines in 2009 and 2010.

Market receipts were up 11.2% to $46.0 billion. Crop receipts, which rose 13.3% to $25.4 billion, made up more than half of total farm cash receipts for the third consecutive year. Livestock receipts rose 8.7% to $20.6 billion, the largest year-over-year gain since 2001.

Receipts rose for most grains and oilseeds, primarily because of higher prices. Canola and wheat recorded the largest increases in dollar value. Canola receipts increased 30.6%, or $1.7 billion, to $7.3 billion in 2011. Wheat receipts were up 31.5%, or $1.2 billion, to $5.1 billion.

On average, canola prices were 26.8% higher in 2011 than in 2010, while wheat prices were up 34.6%. Canola was the highest grossing crop in Canada for the second year in a row.

Prices for hogs and for cattle and calves, which started rising in spring 2010, continued to increase throughout 2011, primarily because of low North American inventories and high feed grain costs.

Hog receipts rose 14.9% to $3.9 billion. The average price for hogs in 2011, which was 14.5% higher than it was in 2010, reached its highest level since 2001.

Receipts for cattle and calves rose 5.8% to $6.5 billion, as a 20.5% increase in price more than offset a 10.6% decline in the number of head marketed. Lower on-farm inventories limited the supply of market animals. As a result, the number of cattle and calves sold for domestic slaughter declined 7.5%, while international exports fell 34.7%.

In the supply-managed sector (dairy, poultry, eggs), farm cash receipts rose 7.9%, mainly a result of higher prices as feed grain and other production costs increased.

Chicken receipts increased 14.9% to $2.3 billion, while dairy receipts increased 5.3% to $5.8 billion. Supply-managed commodities accounted for almost 45% of total livestock receipts.

Farmers' expenses

Farm operating expenses decreased in 2010 for the second consecutive year, falling 2.9% to $35.0 billion. Lower fertilizer, feed and pesticide expenses more than offset an increase in labour and machinery fuel costs.

Lower prices throughout most of 2010 pushed fertilizer expenses down 15.5%. Price decreases were also the major factor in the 10.3% drop in pesticide expenses. However, wet spring conditions in Saskatchewan and Manitoba led to reductions in seeded areas and to the lessened use of both of these inputs.

Commercial feed expenses decreased 7.6%. Feed grain prices were lower throughout much of 2010, as were cattle and hog inventories.

Net farm operating income and farm size

Higher revenues and moderate costs should mean better profits. However, farm income figures show that these gains tend to be concentrated among farms earning more than $250,000. In 2010, average net farm operating income ranged from $1,617 for farms earning between $10,000 and $49,999 to $249,362 for those earning $500,000 or more.

Canadian farmers' average operating margin was 16.08 cents per dollar of revenue in 2010. Among revenue classes, average margins ranged from a deficit of 6.28 cents for farms with revenues between $10,000 and $49,999 to a profit of 21.40 cents for those earning between $250,000 and $499,999.

The Farm Product Price Index, which shows the changes in prices that farmers receive over time, rose 14.8% on an annual basis in 2011, the first increase since 2008. Total livestock and animal products prices have been increasing slowly since 2007; however, 2011 saw the first double-digit increase with a 12.5% rise in these prices from 2010. Cattle and calves prices increased 19.5% in 2011, while hog prices grew 13.0%, much slower than the 20.4% growth of 2010.

Among crops, grains and oilseeds, prices increased 24.8% in 2011. Specialty crops—dry beans, dry peas, lentils, mustard seed, sunflower seed, and chick peas—increased nearly 16% from 2010. Potatoes (7.1%), vegetables (2.2%) and fruit crops (1.3%) showed smaller increases in 2011.

Chart 2.1 Average net operating income per farm, by revenue class, 2000 to 2010
View data source for chart 2.1

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