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Farming profitability up last year

Farming profitability up last year

Posted on: 6/5/2018 | Author: ATB Financial's Economics + Research Team

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The Owl took a peek at farm cash receipts in Alberta yesterday. Statistics Canada reports on two categories: crop receipts, which racked up a new record high of $6.9 billion, and livestock receipts, which weren’t far behind at $6.4 billion. Combined, it was the highest year on record for total farm cash receipts.

But what about operating costs? How have the expenses associated with farming risen over time and how profitable has agriculture been lately?

The graph below shows Alberta’s total farm cash receipts (including crop, livestock and direct payments such as insurance claims) compared to operating expenses. Both have climbed over the last 20 years with the gap widening nicely in recent years in favour of increased profitability.

In 2017, cash receipts were $14.1 billion and operating expenses were $10.5 billion, yielding a net income of $3.6 billion. That was a record high. Statistics Canada also calculates a measure of “realized net income,” which takes net cash income and subtracts depreciation on equipment and machinery. Realized net income from agriculture in Alberta was $1.8 billion, also a record high.

Hard work, innovation and expert management on the part of Alberta’s farmers have been instrumental to the sector’s strong performance in recent years. But even the best management can’t overcome all the challenges created by bad weather. With the 2018 growing season underway, let’s hope the weather cooperates and that 2018 is another record-breaking year.

Farm cash receipts, graph​​​

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