Net farm income to slip in 2016 and 2016 as livestock herds expand: forecast

OTTAWA – Net cash income for farmers is forecast to dip slightly for both 2016 and 2017 as livestock producers take a hit from swelling herds of both cattle and hogs in Canada and the U.S.

Overall net cash income in 2016 is estimated to slip by two per cent to $14.8 billion, with another seven per cent decline in 2017 to $13.8 billion

Agriculture and Agri-Foods Canada’s 2017 outlook, released Friday, predicts that grain farmers will see rising incomes for both years as last year’s bumper harvest moves through the markets, but livestock producers will lose ground.

Crop receipts are forecast to increase two per cent to $32.6 billion for 2016 and rise another one per cent, to $32.9 billion, in 2017.

Livestock receipts are expected to be down seven per cent for 2016 to $23.9 billion, with a further decline of four per cent for 2017.

Expanding meat production in the U.S. is leading to weaker prices for cattle and hog farmers on both sides of the border. American meat supplies are rising after years of decline, the outlook said.

Production of principal field crops in 2016 is estimated to be 91.7 million tonnes, the second highest on record, surpassed only by the 97.8 million tonnes harvested in 2013. Sales in 2017 are forecast to increase, as much of that crop will be marketed in this calendar year.

Farm operating expenses are forecast to decline by about one per cent in 2016 to $44.2 billion and increase by two per cent in 2017 to $45.1 billion. In 2016, lower spending on fuel, fertilizer and livestock purchases is expected to offset higher costs for labour and commercial feed.

The forecast said that longer-term prospects for Canadian farmers are good as growing populations and rising incomes in developing economies raise demand for agricultural products.

Risks include a large change in the price of oil as well as the exchange rate, which could hit receipts or operating costs.

The department said declining commodity prices in the U.S. in 2015 did not impact Canadian producers, due to a large depreciation in the Canadian dollar. For 2016 and 2017, however, the exchange rate is expected to be generally stable and Canadian farmers will be more exposed to international price fluctuations.