The net realized income of Canadian farmers has fallen a shocking 41% since the beginning of 2018.
In a report released by Statistics Canada on Tuesday, 2018 was found to be the worst year for Canadian farmers in over a decade. Net realized income is the difference between a farmer’s cash receipts and their expenses.
“Realized net income of Canadian farmers declined 41.0% from 2017 to $4.2 billion in 2018 on sharply higher costs and a slight increase in receipts. It was the largest percentage decrease in realized net income since 2006 and followed a 2.8% decline in 2017,” Statistics Canada reported.
In 2018, farmer’s net income decreased in nine out of ten provinces, with the West hit the hardest.
“New Brunswick was the sole province to post a gain (+7.7%), attributable to increased cannabis and potato production. Lower canola receipts contributed to pushing realized net income in Alberta down 68.0%, accounting for more than one-third of the national decrease.”
With the market for most agricultural products stable, Statistics Canada attributes decreasing farm profits to rising costs.
Fuel costs rose substantially in 2018, rising 18.0%, representing one of the largest increases in expenses that year. With the introduction of the federal carbon tax, that cost is likely to have increased substantially in 2019.
Statistics Canada also reported that the interest expenses farmers paid were at their highest level since 1981, meaning farmers have been taking on significant debts to deal with rising costs.
The situation is particularly bad for farmers in the West, with sales of a Western staple, lentils, falling 35.1% after the Indian government enacted tariffs on the crop in late 2017.
The Trudeau government, which has a strained relationship with the Indian government, has so far failed to negotiate the removal of these trade barriers.
Canola receipts also decreased by 6.5% on average, with Alberta being hit hardest with a 16.1% decrease.
Canola farmers are likely to continue to struggle in 2019 after China banned Canadian canola in the summer.
There were some boosts to the agriculture sector in 2018 such as a 198.4% increase in cannabis revenues and a 14.1% increase in corn receipts but overall the agriculture sector remains on the decline for the second year in a row.
Shipping disruptions caused by a strike at CN Rail and continuing trade disputes with China and India suggest 2019 will not be any better for Canada’s struggling farmers.