This week, Statistics Canada reported that the country's farmers saw realized net farm income fall by 45% to $3.9 billion in 2018, the second consecutive annual drop in income and the lowest reported in eight years. This is the largest year-over-year drop reported since 2006. While the agency reports little change in farm receipts, farm expenses are reported up 6.5% to a record high of $50.6 billion, the largest year-over-year increase in six years.
Statistics Canada reported 2018 total farm cash receipts increasing by 0.1% in 2018 to $62.2 billion, while climbing for eight consecutive years. Total crop receipts were reported to increase by 0.9% to $35 billion, climbing four consecutive years.
Note that this includes a $375 million or 198% increase in cannabis sales, attributed to the legalization in October 2018. Without this increase, crop receipts could be viewed to fall year-over-year.
Total crop receipts as a percentage of the total farm cash receipts total 56.2%, close to the highs reached in 2013 (56.4%) and 2016 (56.6%).
The following represents the year-over-year change in cash receipts for miscellaneous crops:
-- wheat receipts up 11.6% to a record $5.657 billion
-- durum receipts down for a fourth year by 6% to $1.048 billion
-- oats receipts are the highest in three years at $497 million
-- barley receipts are the highest in five years at $843 million
-- canola receipts are down 6.5% to $9.3 billion, down from the 2017 record of $9.950 billion
-- soybean receipts were reported at a record $3.053 billion
-- corn receipts were up 9.9% to $2.260 billion
-- lentil receipts were down for a third year to $702 million, down 35% from the previous year and the lowest in six years
-- dry pea receipts at $825 million, down by 9.7%, and lower for a second year.
The attached chart shows the receipts of only the major field crops by province, stripping out data such as for vegetables, fruit sales and the cannabis data which is quickly growing due to the October 2018 legalization. Receipts of the major crops ranged from $3.4 billion for Ontario (12%) to $10.8 billion for Saskatchewan (0.2%), with the year-over-year change shown in brackets as indicated by the black line with markers. When compared to 2017, receipts of the major grains fell by 2.6% in Manitoba and 11.1% in Alberta, where weather challenges hampered crop development and interfered with harvest.
The brown line with markers show the importance of field crop production of the major grains in each province, calculated as a percentage of total farm receipts, which includes all possible sources, including livestock. This ranges widely from 77.7% in Saskatchewan to as low as 24.8% in Ontario, which has a much more diversified ag economy.
Producers will be bracing for another challenging year ahead. The Canadian Federation of Independent Business monthly Business Barometer pegs the May Agriculture Index at 46.2, up slightly from the April reading and among the lowest of the 13 business sectors evaluated. Optimism is shown at levels above an index of 50, with an index of 65 to 70 said to represent a sector operating at capacity. April and May show the two lowest ratings seen since July/August 2018, while the May index of 46.2 is 8.8 points below the May 2018 index.
DTN 360 Poll
This week's poll asks which crop will have the greatest potential for price improvement over the upcoming crop year. You can weigh in with your thoughts on the lower-right side of your DTN Home Page.
Cliff Jamieson can be reached at email@example.com
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