Canadian Agriculture While grains and oilseeds might have peaked, it’s a long way down
Mike Raine
Managing Editor WP Media
Total seeded acres in Western Canada are about 62 million in an average year.
There are about 26,500 farmers doing the business of farming on 15,000 western Canadian farms.
We estimate that farmers in Western Canada typically spend between $120 and $365 per acre on cash costs of operations, depending on the types of crops for the region.
Average annual spend on cash costs, exclusive of capital land and machinery, about $11 billion, with total costs running about 76 cents for every dollar of farm-gate sales or about $15 billion.
Fixed costs including land, machinery and storage are between $75 and $300 per acre.
Typical average gross returns are $370 per acre. Highs of $800 and lows of $220 are common.
Annual gross sales grains and oilseeds is about $18 billion. 2012 it might be closer to $21. Average farm enterprise size is 4,000 acres with $1.3 million in sales.
An average farm operator in 2012 operates 2,250 acres and takes in $210,000 in net sales and from this makes payments to capital and draws living expenses. This does not include livestock sales or custom work. Often farm operators at the peak of their careers operate more land than this, while smaller operations, new farmers and those in later life operate fewer acres with higher costs – thus the average. There are extremes at both ends of the spectrum.
While western Canada is looking good and forms the basis for a large portion of Canadian agriculture, lets look at the nation as a whole.
Farming occupies 7.2% of the total land base in Canada. As a percentage of total land area in each province, total farm area ranged from 0.1% in Newfoundland and Labrador, to just over 42% in Prince Edward Island and Saskatchewan. The majority of the total land in agriculture in Canada was owned by those who operate it, at 61.5%. This is followed by rented land at 21.9% and land leased from government at 13.1%
CDN cropping trends 2006 to 2011 30,000,000
25,000,000
20,000,000
2006
15,000,000
2011
10,000,000
5,000,000
0 Wheat
Canola
Lentils
Flax
Corn
Soybeans
Barley
Oats
Farmgate value of major CDN crops $30,000,000,000
$25,000,000,000
$20,000,000,000
$15,000,000,000
2006 2011
$10,000,000,000
$5,000,000,000
$0 Wheat
Canola
Lentils
Flax
Corn
Soybeans
Barley
Oats
Total major crops
Gross CDN farm receipts 2006 2011 $20,000.00 $18,000.00 $16,000.00 $14,000.00 $12,000.00 $10,000.00 $8,000.00 2006 $6,000.00 $4,000.00 $2,000.00 $0.00
2011
Value of CDN farm machinery 2006 to 2011 $12,000,000,000
$10,000,000,000
$8,000,000,000
$6,000,000,000
$4,000,000,000
$2,000,000,000
$0
2006 2011
Increase in value of CDN farm machinery 2006 to 2011 $3,000,000,000
$2,500,000,000
$2,000,000,000
$1,500,000,000
$1,000,000,000
$500,000,000
$0
-$500,000,000
Increases in value of CND farm machinery 2006 to 2011 $6,000,000,000
$5,000,000,000
$4,000,000,000
$3,000,000,000
$2,000,000,000
$1,000,000,000
$0
-$1,000,000,000
Labour force remains an issue. There are few alternatives other than to increase efficiency with new technology and larger machinery.
Tractors and Combines 2011 - 2012 6,000
5,000
Units sold
4,000
2011
3,000
2012
2,000
1,000
0
Tractors 2WD 100 h.p.+
Tractors 4WD
Combines
Canada’s agricultural sector is resilient and flexible as it continues to adapt to changing conditions. Grain and oilseed production and beef farming have long been the backbone of Canada’s agriculture industry. Oilseed and grain farms again represent the greatest number of farms across the country.
However, they widened the gap with other farm types, representing 30.0% of all farms, up from 26.9% in 2006. Beef farms, while declining in number since 2006, were still the second most numerous farm type by 2011.
Beef operations were historically a close second as they comprised 27% of all farms in 2006. This sector experienced many challenges since the BSE outbreak in 2003 and as a result now accounts for 18% of all farms.
Will Canadian producers have the money to keep spending at this rate on their operations going forward?
• Production is rising • Low carry-in stocks • US and Black Sea have poor inventories • Canadian dollar will rise • Oilseed and cereal production will rise World wide • Palm oil supply is rising • Rising incomes in developing nations • Fertilizer costs are predicted to level off, with some decline possible for N. • Land price rise in Western Canada
The road to agricultural prosperity in Canada has been a long one. The good news is that is a long way back.
Mike Raine Managing Editor WP Media