The average Canadian farmer has a growing net worth of more than $1.1 million, according to a new Statistics Canada farm financial survey.
Despite farm debt that has hit new records every year since 1993, Canadian farm assets are growing faster than debt and farmers’ reliance on debt financing is declining, relative to assets.
In 2006, the average farm in Canada had assets worth $1.35 million and debt of slightly more than a quarter of a million dollars, according to the Farm Financial Survey published in late 2007.
“The debt-to-equity ratio is a measure of the reliance of farm operations on debt,” the study said.
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“This ratio declined on average from 24 percent in 2005 to 23 percent in 2006. The 2006 average debt-to-equity ratio is on par with 2001.”
As usual, averages mask disparity among provinces, sectors and revenue classes.
While the Canadian average net farm worth was $1.1 million, it ranged from a low of $717,500 in Saskatchewan to a high of $1.8 million in British Columbia and almost $1.4 million in Alberta.
Similarly, while the average net worth of a Canadian grain and oilseed producer was slightly more than $1 million in 2006, the average net worth of a dairy producer was $2.2 million, almost $1.5 million for a hog producer and just $832,000 for a cattle rancher.
The farm sector enjoying the highest net worth in 2006 was the poultry and egg industry with average net worth of more than $2.9 million after debt liabilities.
The annual farm financial survey reveals that the Canadian cattle sector is the least profitable of all.
“Although 2006 was the first full year that the U.S. border was reopened since 2002, cattle operations experienced a drop in net cash farm income of 16 percent,” said the analysis.
While gross revenue increased, expenses and debt serving charges increased faster.
The net cash farm income for cattle operations including feedlots was $10,571 in 2006; $14,304 in Alberta. By contrast, typical grain and oilseed farms in Alberta had net cash farm income of almost $43,000 in 2006 and hog farmers had an average $148,000.
The farm financial profile also punctured a hole in Statistics Canada’s conclusion after the 2006 census that there are 230,000 farms in Canada, a shrinking number that had farm leaders wringing their hands about the loss of thousands of farms in the previous five years.
The farm financial survey excludes operations with gross revenues of less than $10,000, which removes 85,000 “farmers” from the ranks of Canada’s farm population and reduces the number of operations with sales of at least $10,000 to 145,000.
Subtract farm operations with gross sales of less than $100,000 and the number of farms is less than 100,000.
The survey found that farms with gross revenues of less than $25,000 averaged losses in 2006 of $6,518 and paid just several hundred dollars in wages to family members.
Farms with gross revenues of more than $50,000 but less than $100,000 had net farm income of less than $7,000 and paid family wages of less than $2,000.
Only on farms with gross revenues of $250,000 or more did net cash farm income increase to a living wage, an average $111,000.
The contrast in net farm income was striking between revenue classes.
In Manitoba, average net cash farm income was $28,262 in 2006 but $93,922 for farm operations with revenues of more than $250,000.
In Saskatchewan, the contrast was a $24,153 average and $96,455 for a farm with revenues of more than $250,000. In Alberta, the contrast was $29,516 and $116,686.
