Question Period Note: FARM INCOME SITUATION FOR 2024 AND 2025

Q1 – How are the recent shifts in U.S. and Chinese trade policies expected to impact producers’ economic situation in 2025?
Q2 – Many farmers have seen large increases in expenses in recent years. How has this impacted their bottom line? Q3 – Which expenses have seen the largest increases in recent years? Q4 – How are the recent weather and climate challenges impacting farmers’ economic stability in 2025? Q5 – What is the Government doing to support farmers during this challenging period?

R.1 - It is expected that tariff increases would negatively impact exports, pressuring prices, and they could further disrupt global supply chains, adding to production costs, although impacts are expected to vary by product. Furthermore, most agricultural trade with the U.S. is not being impacted due to CUSMA products being exempt. Despite this, changes in the trade environment are nonetheless expected to increase overall uncertainty for producers.

Additionally, China’s recent announcement of a preliminary anti-dumping duty on imports of canola from Canada is expected to push overall marketings lower, although canola marketings for the first half of 2025 were higher as China’s buyers sought to increase purchases before the tariffs came into effect.

Other sources of uncertainty also exist, such as growing conditions and continuing geopolitical shocks which, combined with adverse trade policy shifts, could increase global commodity prices and weaken global economic growth and demand. Any resulting inflationary pressures could also increase farm input costs. R.2 - Generally, overall income has remained strong in recent years, as increasing global crop prices in 2021 and 2022, and higher crop marketings and strong cattle prices in 2023, helped offset the elevated input costs. Overall, expense growth in 2024 was much more moderate, increasing only 2.4 per cent, however incomes fell as grain receipts continued to decline. Higher incomes from 2020 to 2023 have put most farms in solid financial positions such that weathering a period of lower prices and incomes is possible.
While the overall financial situation is solid, the economic impacts of these changes have not been evenly distributed between sectors or regions, and the situation for many producers may be different. R.3 - Fuel, fertilizer, and feed expenses saw sharp increases in 2021 and 2022, as the economy recovered from the pandemic with rising global inflation. Subsequently, Russia’s war against Ukraine significantly disrupted global commodity markets even further. These expenses moderated in 2023 and have generally been declining since.

Interest expenses also increased in 2022 as the Bank of Canada raised rates to fight inflation and saw further increases in 2023 and 2024. Livestock purchases have also increased in recent years due to higher animal prices. R.4 - In some parts of the Prairies, below-normal precipitation and prolonged heat have led to below-average crop conditions, while timely July rainfall in other areas has helped improve crop conditions. Growing conditions in Eastern Canada have also been mixed, with above-average temperatures across the region, below-normal rainfall in much of Ontario and Atlantic Canada, and above-normal precipitation in Quebec.

Based on the results of Statistics Canada’s preliminary modelled crop production estimates, released on August 28, 2025, production of principal field crops is projected to be up marginally by, 0.6 per cent, from 2024 and 5.9 per cent above the previous 2020-2024 average. On the Prairies, overall production is expected to increase 1.5 per cent from the 2024 level, and 7.8 per cent above the 2020-2024 average. While the overall size of the crop is projected to improve in 2025, we understand that producers in some regions may still struggle with challenging growing conditions and weather instability. R.5 - Federal and provincial governments continue to provide support through the business risk management programs to help producers manage risks (for example, drought, flooding, market declines and increased input costs). Producers are also supported by programs such as the Advance Payments Program, Agriculture Climate Solutions - On-farm Climate Action Fund, Resilient Agricultural Landscape Program, Poultry and Egg On-Farm Investment Program, Agriculture Clean Technology Program, as well as other Grant and Contribution programs.

Net cash income (NCI) is the primary measure used by AAFC to assess the short-term outlook for farm income for the sector and is the difference between all cash receipts and operating expenses. It represents the amount of cash generated by the farm sector that is available for debt repayment, investment or withdrawal by operators. As of May 28, 2025, Statistics Canada (STC) reported that NCI in 2024 was $19.7 billion (B), which is 14.9 per cent down from the record 2023 level of $23.1B. The key drivers of the change are as follows:
Total farm cash receipts (FCR), which include crop receipts, livestock receipts and program payments, declined 1.6 per cent. Total crop receipts were down 6.2 per cent (-$3.5B), primarily due to lower prices for most major grains and oilseeds. Over half of the decline can be attributed to lower wheat (excluding durum) receipts as prices fell 20.4 per cent. This was the first decline in crop receipts since 2014. Livestock receipts increased 6.9 percent (+2.6B) in 2024, primarily due to robust cattle prices which were up 13.1 per cent over 2023 levels on strong demand and tighter cattle supplies.
Lower program payments (-10.8 per cent) also contributed to the decline in FCR in 2024, a decline in crop insurance payments as well as lower stabilization payments in Quebec and lower dairy direct program payments were behind the decrease, offsetting higher AgriStability payments.
Operating expenses in 2024 were up a modest 2.4 per cent to $78.3B, primarily due to higher interest expenses (+28.6 per cent), offsetting declines in feed and fertilizer expenses. An increase in livestock purchases and higher labour costs also contributed to the rise. This was the smallest increase in expenses since 2016 (+1.2 per cent).
The outlook for 2025 is still very uncertain. According to STC’s release of FCR data for the first 6 months of 2025 on August 29, 2025, FCR increased 3.3 per cent from the same period in 2024 to $49.6 B. This is mainly the result of higher livestock receipts driven by higher cattle and hog prices, as program payments decreased (on lower crop insurance payments). Crop receipts for the first 6 months of 2025 were largely unchanged from 2024, with higher marketings being offset by lower prices, however they are 8.5 per cent higher than the 2020-2024 average.
AAFC’s summer farm income forecast for 2025, which was based on conditions and data as of June 2025 and provides an estimate for the entire year, is forecasting a decline of 6.0 per cent for NCI in 2025, as modest growth in expenses is expected to overtake smaller growth in receipts. While the actual growth in farm cash receipts reported by Statistics Canada over the first 6 months of the year is ahead of the pace expected by AAFC’s most recent forecast, uncertainty still exists for the second half of the year.
Several key global supply and demand factors have been influencing Canadian farm income in recent years, which are expected to continue in 2025. This can be seen in two distinct trends: the continued decline in crop prices which has been more than the decline in input prices, and very strong cattle prices. Global crop prices, which peaked in mid-2022, are expected to continue to fall in 2025, due mainly to ample global crop supplies and weaker demand for grains as energy feedstocks. For cattle, the recent drought and a reduction in the North American cattle herd, along with strong beef demand, has pushed up cattle prices, with further increases expected.
Some general risk factors, such as worsening geopolitical tensions impacting supplies and input prices, as well as extreme weather events, remain. However, the main uncertainty that has recently emerged has been the new direction in U.S. trade policy, particularly the impact of worsening trade relations between U.S. and China, which could lead to sudden and unpredictable changes in global demand and crop prices, as well as increases in volatility moving forward.
Ultimately how these factors evolve over the second half of the year will be very important to the overall economic position of the agriculture sector for 2025.

• A financially healthy agriculture sector is critical to Canada’s economic well-being.

• As global crop prices continued to fall from recent peaks, net cash income declined 15 per cent in 2024 to $19.7 billion. However, it remained above the previous five-year average.

• Farm cash receipts for the first 6 months of 2025 increased 3.3 per cent compared to the same period in 2024, largely due to increases in livestock prices, while overall crop receipts were steady.

• The Government is committed to working with its trade partners to maintain market access for agricultural products and supporting producers.