Macroeconomic” factors such as low fuel costs and a depreciating loonie are expected to support Canada’s and Manitoba’s net farm incomes this year — but not at last year’s levels.
In its Canadian Agricultural Outlook, published Feb. 19, Agriculture and Agri-Food Canada says such factors have “insulated Canadian producers from weakness in global commodity markets, which has led to declines in U.S. dollar prices for key agricultural commodities.”
That weakness in global commodity markets is expected to persist, the report said. Global stocks of crops will continue to place downward pressure on grain prices.
Expansion in the U.S. livestock sector will also put pressure on prices for cattle and hogs — particularly for hogs, as the U.S. sector recovers from the 2014 porcine epidemic diarrhea outbreak.
In the medium term, the report said, “fundamental drivers” for farm profitability are expected to stay strong, as economic growth is expected to eventually improve in the developing world, and per capita meat consumption is expected to keep rising as those countries’ middle classes expand.
“As Canada exports a significant share of its agricultural production, these expected improvements in demand will provide additional opportunities for Canadian producers over the next 10 years.”
Canada’s forecast calls for crop receipts this year to remain “virtually unchanged” at $30.6 billion, down from an expected $30.7 billion in 2015.
Canada’s total livestock receipts are expected to slip by four per cent this year to $25.2 billion from an expected $26.2 billion in 2015, as Canada will continue rebuilding its cattle-breeding herd over the next several years.
Farm family income, which includes off-farm wages, investment income, and farm salaries paid to family members, has been rising steadily and is expected to reach $136,900 per Canadian farm family in 2016. “Other” family income is to increase to 78 per cent of total farm family income, up two per cent.
Manitoba’s net shrinks
Manitoba’s total farm cash receipts are expected to hit $6.06 billion in 2016, down two per cent from the expected 2015 level of $6.17 billion but up 13 per cent from the 2010-14 five-year average of $5.34 billion.
Manitoba crop and livestock receipts are both expected to slip two per cent in 2016, to $3.31 billion and $2.47 billion respectively.
Net operating expenses, however, are expected to rise four per cent in 2016 over 2015 and program payments are seen nearly flat, leaving Manitoba’s total net farm income at $472.6 million, down 48 per cent from 2015.
Manitoba farms’ average net operating income per farm is expected to drop 19 per cent, to $78,488, on farm cash receipts of $476,803.
Manitoba farms’ family income in 2016 is expected to include $32,780 in net farm operating income and $84,495 in “other” income per family, for total farm family income of $117,276 per family, down three per cent from the expected 2015 level but up 13 per cent from the five-year (2010-14) average.