Statistical look at farm profitability is insightful

Statistics Canada recently released a raft of farm income and expense statistics. Combing through the numbers provides interesting insights into agricultural profitability.

When you look at total net farm income, you quickly see that farm viability is difficult in Newfoundland and Labrador along with Nova Scotia. Despite the supply-managed industries making up a significant portion of agriculture in those provinces, total net income was mostly negative over the past three years. The worst was Nova Scotia in 2019 with total net farm income at negative $35 million.

British Columbia wasn’t much better. Despite much larger farm cash receipts than Atlantic provinces, total net farm income in B.C. was just $52 million in 2019.

By comparison, the 2019 total net farm income in the five biggest agricultural provinces was $2.245 billion in Saskatchewan, $862 million in Quebec, $769 million in Alberta, $659 million in Ontario and $420 million in Manitoba.

Of the five, Quebec with its large dairy and hog sectors is the most reliant on livestock receipts. In 2019, 57 percent of Quebec’s gross farm receipts came from livestock.

Interestingly, Alberta with its large cow-calf and feedlot sector has become a province where livestock receipts are only slightly larger than crop receipts. Livestock accounted for about 47 percent of total receipts in 2019, with crop receipts close behind at 46 percent. The balance of farm receipts (about seven percent) came from direct payments, mainly crop insurance, but also AgriStability and AgriInvest.

The split in Ontario is 52 percent of gross receipts from crops and 44 percent from livestock. Manitoba is 60 percent crops and 36 percent livestock.

Saskatchewan, as you would expect, is the most reliant on crops. The stats show 79 percent of gross receipts coming from crops with just 17 percent from livestock. That imbalance is providing Saskatchewan with by far the best net farm income of any province.

While Quebec and to a lesser degree Ontario have some unique provincial farm support programs, this doesn’t really show up in the direct payment totals. Direct payments in 2019 accounted for just 5.5 percent of gross receipts in Quebec and about four percent of Ontario’s gross receipts. Both were below Alberta’s seven percent, which was inflated by large crop insurance payments.

Which province got the most money from AgriStability in 2019? That would be Saskatchewan at $112 million, narrowly ahead of Alberta’s total.

Not surprisingly with contributions based on net sales excluding supply-managed commodities, Saskatchewan also received the most from AgriInvest at $80 million.

Which province do you think has the highest expenses for cash wages and family wages? By a significant margin, that distinction goes to Ontario, probably due largely to its fruit, vegetable and greenhouse production.

Which province has the highest interest payment expenses? Again, the prize goes to Ontario with nearly $1.1 billion in interest expenses last year. Alberta was second at $896 million, followed by Quebec at $845 million and Saskatchewan at $633 million.

Saskatchewan and Alberta dominate fertilizer use with Saskatchewan farmers spending more than $2 billion in 2019 and Alberta producers shelling out $1.4 billion.

When it comes to depreciation charges on machinery and equipment, Saskatchewan narrowly edges out Alberta at $1.678 billion versus $1.627 billion.

When all the numbers for 2020 are finalized and released, my guess is that the profitability gap between grain and livestock will continue to widen.

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