Realized Canadian farm income up, net income down in 2023

Glacier FarmMedia—Realized net income for Canadian farmers rose 18.3 per cent in 2023 to C$14.5 billion, as growth in receipts offset a rise in expenses, according to a report from Statistics Canada released May 29.

The increase followed a 4.1 per cent decline in 2022 and a 69.6 per cent increase in 2021. However, total net income, which adjusts for changes in farmer-owned inventories of crops and livestock was down on the year.

Realized net income is the difference between a farmer’s cash receipts and operating expenses, minus depreciation, plus income in kind.

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Total farm cash receipts rose 4.4 per cent compared with 2022.  Higher prices for cattle and calves resulted in increased livestock receipts while higher crop marketings contributed to increased crop receipts. Program payments decreased $758.4 million in 2023, as much of the relief related to the 2021 drought had been paid out in 2022, said StatCan.

Total expenses (after rebates) increased at a more modest pace of 2.4 per cent in 2023. Farmers faced higher costs for interest expenses (+39.1 per cent) and livestock and poultry purchases (+36.5 per cent), while key agricultural inputs, such as fertilizer and lime (-18.9 per cent) and machinery fuel (-14.1 per cent) declined following gains in 2022.

Saskatchewan saw the largest increase in realized net income, rising by C$1.9 billion on the year to hit C$6.065 billion. Manitoba’s realized net income was up by C$227 million at C$1.823 billion, while Alberta saw realized net income up by C$374 million at C$3.528 billion.

To the east, both Ontario and Quebec reported reductions in realized net farm income, with Ontario down by C$67 million at C$2.501 billion and Quebec posting a C$244 million drop at C$601 million.

The gains in the Prairie provinces were mainly the result of a drop in fertilizer prices, the largest expense item for grain growers, while lower hog receipts were the main factor in the decrease in Quebec.

While realized net income was higher for Canadian farmers overall, net income decreased by C$8.9 billion on the year to come in at C$12.8 billion in 2023.

Total net income is realized net income adjusted for changes in farmer-owned inventories of crops and livestock. It represents the return to owner’s equity, unpaid farm labour, management and risk. In 2023, the year-end inventories were lower compared with 2022 due to increased marketings. Inventories in 2022 were higher as result of better growing conditions, which led to higher production following the drought in 2021, according to StatCan.