Record growth forecast for overall farm income in Canada in 2021
Canadian farmers and producers contribute nearly $140 billion to our national economy, and are responsible for more than 2 million jobs across the country. Even in the face of many challenges in 2021, Canadian farmers worked hard to ensure our agricultural sector remains an engine driving Canada’s economy – helping Canada to build back better.
Agriculture and Agri-Food Canada has completed its farm income forecast for 2021 and 2022, and the results show that Canadian farm income reached record levels in 2021.
Despite COVID-19, the drought in Western Canada, the floods in British Columbia and other trade disruptions, the overall agriculture sector saw growth in 2021 and is expected to continue to perform well in 2022. While every farm faces unique circumstances and will have experienced the last year differently, this continued growth of overall farm income shows that the sector is resilient in the face of significant disruptions.
Net Cash Income (NCI) for 2021 is forecast to have grown by 49 per cent, from $17.8 billion in 2020 to $26.6 billion in 2021, mainly due to higher commodity prices. This represents a new record, exceeding the mark established in 2020. While the drought in Western Canada caused significant production losses, grain and oilseed prices were up substantially. As such, overall crop receipts are forecast to have increased by 17 per cent. In the livestock sector, hog prices have been very strong, contributing to a 15 per cent increase in livestock receipts. Program payments are also forecast to have increased due to higher crop insurance payments. While input prices in 2021 are also forecast to have increased, the growth in receipts is expected to have exceeded the growth in expenses.
Additionally, average net operating income (NOI) per farm is forecast to have increased by 59 per cent in 2021, from $91,500 in 2020 to $145,000 in 2021. Average farm family income is forecast to have increased by 27 per cent to $229,000 in 2021.
Looking ahead to 2022, Net Cash Income is forecast to decline 25.8 per cent to $19.7 billion due to the impact of the 2021 Western Canada drought on supply going to market in the first half of the year. While this might be viewed as a substantial decrease, it is relative to the record levels of 2021; the forecast for 2022 would still be the second-strongest year on record. Average net worth of farms in Canada is also forecast to remain strong for 2022.
Building on this year’s forecast and record performance is further evidence that the agriculture and agri-food sector in Canada is strong. Despite the impact of extreme weather, the global pandemic and trade disruptions, the sector remains a resilient engine of growth and is playing a key role in re-igniting the Canadian economy.
Quick facts
• Net Cash Income (NCI) is the main metric Agriculture and Agri-Food Canada uses to measure farm income.
• NCI for 2020 reached a record level $17.8 billion, supported by a record grain harvest despite COVID-19 impacts. Additionally, the value of farm equity increased by 4.4 per cent to $563.2 billion.
• Final actual 2021 numbers are expected from Statistics Canada later in the spring. Statistics Canada will be releasing fourth quarter receipts for 2021 on February 28, and its estimates of farm income for 2021 on May 25. Agriculture and Agri-Food Canada’s next forecast will build on these releases and provide an updated forecast for 2022, as well as a new forecast for 2023.