21 February 2012

2 minute read

North America

"In 2011, Canada benefited from another strong economic performance by the agricultural industry," said Agriculture Minister Gerry Ritz. "And the results of our forecasts for 2012 are even better than expected. Continued high prices in crop and livestock markets are predicted, meaning that prospects for Canadian farmers look solid in the year ahead."

Together, the Farm Income Forecast for 2011 and 2012 and the Medium Term Outlook provide an overview of the sector and give producers, stakeholders and governments a benchmark as they plan for the years to come.

Highlights

The average net operating income for farms in 2011 is expected to reach record levels of just over $65,000, and net cash income at the sector level is forecast to rise 24 per cent to $11.7 billion, surpassing last year's record high of $9.5 billion. Despite difficult growing conditions last year in parts of the country, and higher operating expenses driven by fertilizer, fuel and feed costs, 2011 saw an increase in overall farm income levels due to higher prices for hogs, grains and oilseeds. Disaster assistance and production insurance payments to Prairie farmers dealing with a second year of excess moisture also contributed to income levels.

Preliminary forecasts for 2012 promise another good year for the agricultural sector, though farm incomes are expected to drop slightly from record highs in 2011, based on the assumption that the year will see lower program payments and modest increases in expenses, despite projections of continuing high market prices.

Global markets will continue to play an important role for Canada's agriculture and agri-food sector. The Medium Term Outlook for the 2011-2021 period is characterized by high international grain and oilseed prices compared to the pre-2006 period, something that analysts expect will lead farmers to increase their production of these crops.

The Outlook points to modest improvements for the red-meat industry, as prices have been rising since 2010 after many difficult years. Supply-managed commodities are also projected to register continued stable growth, according to this year's projections.

Background

The Farm Income Forecast is prepared in consultation with provincial governments and Statistics Canada, and is based on information available as of mid-December 2011. The Medium Term Outlook is based on leading indicators as of the fall of 2011, including Canadian macro-economic forecasts from the Conference Board of Canada, published in September, and short-term price forecasts updated using November projections from the United States Department of Agriculture.

The two reports produced by AAFC's Research and Analysis Directorate can be found online at:

Canada's Farm Income Forecast for 2011 and 2012
Medium Term Outlook for Canadian Agriculture 2012

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