By John DePutter & Dave Milne – May 29, 2019
The news:
Statistics Canada released 2018 farm income data this week, showing just slightly higher crop receipts compared to a year earlier, sharply lower realized net income and rising debt.
What it means:
The small increase in total crop receipts in 2018 (+0.9%) wasn’t anything shocking but drilling down in the data clearly indicates wide differences from one crop to another, especially of interesting to Prairie farmers:
Here’s the breakdown of total receipts from the main prairie crops:
Winners over the previous year:
- – Wheat (excl durum): $5.65 billion, up 11.6% and the highest on record
- – Barley $843.1 million, up 19% to the most since 2013.
- – Oats: $497.3 million, up 9%.
- – Flax: $230 million, up 4.6%
Losers:
- – Canola: $9.3 billion, down 6.5%, the first annual decline since 2013.
- – Durum $1.04 billion, down 6.3% and the lowest since 2012
- – Peas: $824.7 million, down 19% from $1.02 billion in 2017 and the lowest since 2010.
- – Lentils: $702.4 million, down 35.1%
A changing of the guard
Overall, not a bad showing in terms of total crop receipts but certainly a changing of places for the crops the receipts came from.
For canola, remember that although China slowed down its purchases near the end of the year, most of 2018 saw strong Chinese demand. The fact canola receipts fell even with China still in the game is sobering. On the other hand, nice to see wheat compensating for the decline in canola with rising receipts. No wonder canola acreage is down this year, while wheat is up.
Meanwhile, it’s no surprise but still important to observe that money coming in from durum and lentils – two crops critically important to the economic well-being of southern Saskatchewan – were both down sharply from 2017.
It’s the net that counts, and the net is down. Sharply.
While total nationwide crop receipts did creep higher in 2018, rising expenses made the year a miserable one for a lot of Canadian farmers.
StatsCan pegged national realized net farm income for the year at just $3.9 billion, down more than 45% from a year earlier. The sharp decline follows a 2.8% drop in net farm income in 2017 and represents the largest percentage decrease since 2006.
This is a very deep decline, to be sure. And it’s not to be taken lightly. Fact is, the big-picture economic situation is changing in this country.
There were lots of anecdotal stories about slim margins and unpleasant profit-loss statements floating around here and there in the countryside. But now the government has confirmed a major downturn in profitability, with this week’s solid aggregate data.
Farm debt up
The other data from StatsCan that was unnerving for anyone surveying the landscape of agriculture was a new all-time high for the debt load among farmers. The implications of that story will be a subject for another day.
DePutter Publishing reports look at the big picture (we saw this downturn in profitability coming and warned about it) as well as the daily short-term action. Grain markets are wild right now, and you can tap into our latest advisories by signing up to a trial below.
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