Canada Markets

This week, Statistics Canada reported Canada's farm cash receipts for the first nine months of 2019 up 4.4% from the same period in 2018 at $47.3 billion. This appears as a record for this nine-month period, 2.3% higher than the five-year average.

Statistics Canada commentary indicates farm cash receipts were higher in every province except for Saskatchewan (minus 2.4%) and Manitoba (minus 2.9%). Crop receipts are also reported at a record $26 billion over the first three quarters of the year, 4.4% higher than the five-year average.

Take cannabis sales from the mix, which have been included since legalization in October 2018 and everything changes. Given the Statistics Canada table of farm cash receipts of selected commodities, we see that for the nine-month period, wheat receipts are down 5% year over year, canola receipts are down 12.1% and soybean receipts are down 19.3% over the past year. Year-over-year increases were noted for durum at 14.6%, barley at 5.1%, corn at 1.1% and lentils at 31.4%, to name a few.

No commodity data compares to the year-over-year increase in cannabis receipts of 421.9%. This is calculated in a move from $262 million in the first nine months of 2018 to $1.369 billion in 2019. This is the fourth-largest receipts reported for the major crops, falling between the $1.165 billion received for soybeans and the $1.469 billion received for corn. Canola receipts for the nine months were $5.902 billion and wheat receipts were reported at $3.914 billion.

When the cannabis receipts are removed from the mix, total crop receipts fall to $24.6 billion, down 2.3% from the same period in 2018. More provinces show a year-over-year loss, with Saskatchewan crop receipts down 3.2%, Alberta down 4.1% and Manitoba down 8.6% from 2018.

Growing pains exist in how this new industry should be treated. One example is seen in Alberta, where the provincial government is changing the tax status for cannabis production facilities in 2020. Rather than treat these operations as agriculture operations and farm buildings, which allowed them to avoid taxes paid to municipal districts and counties, the buildings will be assessed at market value and taxed at non-residential rates. Municipal Affairs minister Kaycee Madu stated that "Cannabis does not fall into traditional definition of agriculture and should not be tax exempt."

While governments across the country are forced to move quickly to deal with this industry, Statistics Canada should show leadership in the way farm income statistics are reported in order to avoid misleading headlines and bad policy decisions.

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Cliff Jamieson can be reached at cliff.jamieson@dtn.com

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