Agriculture and Agri-Food Canada released a 2017 Canadian Agricultural Outlook on Friday, which includes forecasts for both 2016 and 2017. As seen on the attached chart, net cash income is projected to fall by 2% from the record $15.2 billion achieved in 2015, to $14.8 billion in 2016, while is projected to fall by a further 7% in 2017, to $13.8 billion. As indicated by the blue line on the attached chart, this still represents the second and fourth best years on record.
In contrast, net cash income in the U.S. is estimated at $91.9 billion USD in 2016, down 12.2% from 2015 while has fallen 32.2% from the high of $135.6 billion reached in 2013. Net cash income in the U.S. is expected to recover by 1.7% to $93.5 billion in 2017.
The AAFC study points to net cash income within the two countries following a similar path over a 15-year period starting at 2000, while blown apart in 2015/16 with weakening grain and livestock prices in the U.S. partially offset in Canada, given Canadian dollar depreciation.
Pressure in Canada's net cash income is seen coming from the livestock side of the industry. Total crop receipts are estimated by AAFC to increase 2% in 2016, to a record $32.6 billion, while the study is forecasting a further 1% increase in 2017 to a record $32.9 billion. During the same period, total receipts from livestock and products is expected to fall by 7% in 2016, to $23.9 billion, a three-year low, while forecasts show the potential for a further 4% reduction in 2017 to $22.8 billion, which would be a four-year low given Statistics Canada data.
U.S. crop receipts forecast by the USDA for 2016 are shown at $187.7 billion USD, a 1.1% increase from 2015, while 19% below the record $231.6 billion estimated for 2012. Forecasts for 2017 point to a modest .5% drop, to $186.7 billion. Livestock receipts in the U.S. are forecast at $168.1 billion for 2016, down 11.4% from 2015, while 21% below the 2014 record of $212.8 billion. A modest recovery of less than .1% is expected for 2017, to $168.2 billion.
The AAFC report points to the greatest risks for the 2016 and 2017 periods being the price of oil along with the CAD/USD exchange rate. Issues surrounding trade could also be considered.
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