Question Period Note: FARM INCOME SITUATION FOR 2025 AND 2026

Q1 – How are the recent shifts in global trade policies expected to impact producers’ economic situation?
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, and what is the outlook for 2026?
Q5 – What is the Government doing to support farmers during this challenging period?

R1 - While recent progress in trade negotiations have helped ease global trade tensions, uncertainty related to higher tariffs persists. Generally speaking, it is expected that higher tariffs would negatively impact export demand, pressuring commodity prices, and they could further disrupt global supply chains, adding to production costs, although impacts are expected to vary by product.

In the case of the United States (U.S.), most agricultural trade is not being impacted due to the current exemptions for CUSMA-compliant goods, although trade disruptions between the U.S. and other large economies, such as China, can impact trade flows of agricultural products and indirectly impact Canada.

In the case of China, tariffs were placed on imports of canola seeds from Canada in August 2025, in addition to the previously announced tariffs on canola oil and meal, pork, and seafood products in March 2025. The recently announced agreement between Canada and China to lower tariffs is expected to be positive for the relevant commodities, but final details are still pending.

On top of these specific impacts, there is also an increase in general economic and trade uncertainty, which can impact economic performance but is challenging to measure.
R2 - Generally, overall income has remained strong in recent years, as increasing global crop prices in 2021 and 2022, and higher crop marketings in 2023 along with strong cattle prices, helped offset significantly higher farm input prices. Expense growth in 2024 was much more moderate, increasing only 2.7 percent, however incomes fell as grain receipts declined.
It is expected that the 2025 and 2026 expense growth will return to close to their pre-pandemic levels. Overall, higher incomes from 2020 to 2023 have put most farms in solid financial positions such that weathering a period of lower crop prices and elevated input prices 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.
R3 - Fuel, fertilizer, and feed expenses saw sharp increases in 2021 and 2022, as the economy recovered from the pandemic-related supply chain issues, higher global inflation and input prices and, later on, Russia’s war against Ukraine, which significantly disrupted global commodity markets. These expenses declined in 2023 and 2024 as more supplies returned to global markets. 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 driven by tight North American supplies. Overall, farmers have seen farm operating expenses jump 40.5 percent over the past five years.

Livestock purchases are expected to have continued increasing significantly in 2025, while fertilizer prices are expected to have trended upward, reflecting strong natural gas prices and global production shortfalls, along with supply constraints stemming from trade restrictions and stronger demand. While expenses are forecast to remain at high levels, they are not expected to see the aggressive growth rates of recent years.
R4 - The impacts of weather and climate challenges have been varied across the country. In some parts of the Prairies, below-normal precipitation and prolonged heat led to below-average crop conditions, while timely July rainfall in other areas has helped improve crop conditions. Growing conditions in Eastern Canada were also 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 most recent data released by Statistics Canada on December 4, 2025, production of principal field crops in 2025 is estimated to have reached a new record of 107 million tonnes, up 10.4 percent from 2024 and 16.2 percent above the previous 2020-2024 average. On the Prairies, overall production increased 15.9 percent from the 2024 level, while production in Eastern Canada is estimated to have fallen 6.5 percent from 2024. While the overall size of the 2025 crop is estimated to be a new record, we understand that regional variations remain, with some producers continuing to face challenging growing conditions and weather variability.

Also, much of the 2025 crop will be sold in 2026, which is expected to boost grain marketings for the first half of the calendar year. It is too early to determine how the 2026 growing season will evolve, and it will depend on weather and climate conditions throughout the year.
R5 - 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, Agricultural Climate Solutions - On-Farm Climate Action Fund, Resilient Agricultural Landscape Program, Poultry and Egg On-Farm Investment Program, Agricultural 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 November 26th, 2025, Statistics Canada reported that 2024 NCI was $19.6 billion (B), down 14.9 percent, from the record of $23.1 B in 2023, due mostly to lower global prices for most major grains and oilseeds.
While Statistics Canada estimates of 2025 farm income will not be available until late May, AAFC’s recently completed farm income forecast provides an updated outlook of the farm income situation for 2025 and 2026 based on conditions as of December 2025.
While weak global crop prices continued to weigh on farm income, NCI is forecast to have slightly decreased 0.2 percent in 2025 to $19.6 B. Despite income being largely steady, several components saw larger changes. In terms of revenue:
• Crop receipts are forecast to have declined 0.8 percent, due to declines in grains and oilseeds as lower prices driven by larger global supplies, along with lower canola marketings, more than offset higher wheat marketings.
• Program payments are also expected to have declined 14.4 percent due to AgriInsurance payments declining from record levels in 2024.
• On the other hand, livestock receipts increased 11.5 percent, on the back of higher cattle prices and receipts, as well as lesser increases for other livestock.
Overall, total net operating expenses in Canada are forecast to have increased by 4.3 percent to $81.8 B in 2025, following moderate gains of 2.7 percent in 2024 and 4.7 percent in 2023, respectively, and below the significant growth of 19.5 percent in 2022 and 9.5 percent in 2021. Despite the moderate overall increase, more significant movements are happening for specific inputs.
• Relatively large growth is expected for livestock purchases (+32.3 percent) based on higher cattle prices, due to tight cattle supplies in North America, fertilizer expenses (+9.2 percent) based on higher fertilizer prices and labour expenses (+6.3 percent).
• At the same time, the growth in farm expenses is forecast to have been moderated by lower feed expenses (-1.3 percent) as a result of lower commercial feed prices, interest expenses (-3.7 percent), and fuel prices (-1.4 percent) due mostly to lower crude oil prices in 2025.
The impact of record grain and oilseed production in 2025 is expected to support farm finances in the near term. Based on the most recent production data released by STC on December 4, 2025, the 2025 crop size is estimated at 107.0 million tonnes (MT), up 10.4 percent from 2024 and 16.2 percent above the previous 2020-2024 average of 91.9 MT. Despite the record crop, there was regional variability, with crop production up in Western Canada and down in Eastern Canada.
Trends in global crop prices are expected to differ in 2026 with global demand for biofuels supporting oilseed prices, with relatively weaker grain prices. For 2026, NCI is forecast to increase 3.2 percent as oilseed prices and marketings are expected to increase in 2026 while livestock prices remain strong. Total farm net operating expenses are forecast to continue to increase marginally in 2026.
Despite this positive outlook, many risk factors exist for 2026, including weather conditions during the growing season, renewed trade barriers and policy uncertainty, rising geopolitical conflict with the wars in Ukraine and the Middle East, general uncertainty around economic growth and inflation, and threat of animal diseases. The Department is continuing to monitor these factors to understand how they could impact the farm income situation and economic performance of the agriculture sector more broadly.

• A financially healthy agriculture sector is critically important for Canada’s economic well-being.
• After declining by 15 percent in 2024, net cash income (NCI) is forecast to have stabilized in 2025, as grain production reached a new record and livestock prices in North America continued to increase.
• The 2026 outlook for farm income is expected to rise modestly, but there is significant uncertainty as to how the year will evolve, particularly around the trade environment.
• The Government is committed to working with its trade partners to maintain market access for agricultural products and supporting producers.