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First Half Farm Cash Receipts Higher but Drought Impact Looming

Prairie drought means tougher times are on the way, but the first half of this year was nevertheless financially rewarding for Canadian farmers.

A Statistics Canada farm income report Tuesday pegged total farm cash receipts for the January-June period at $38.2 billion, a 12.4% increase from the previous year as higher returns for both crops and livestock offset a decline in government payments.

But as the StatsCan report itself noted, much has changed since. Drought and searing temperatures across much of Western Canada has badly hurt production potential and sent feed costs soaring. Indeed, StatsCan’s first crop production report of the season on Monday showed the production of most crops down by about one-third or more compared to a year earlier.

“The full impact of these challenges will be clearer in future releases of Farm Cash Receipts and Net Farm Income (reports),” StatsCan said.

Crop receipts through the first half of this year amounted to $22.51 billion, up about $2.8 billion or 14% from the same period in 2020, while livestock receipts climbed 12.4% to $14.3 billion. On the other hand, government payments fell by 7.9% to $1.5 billion in the first half of 2021.

The increase in first half crop receipts was mainly powered by canola. With prices up sharply, canola returns for the January-June period amounted to $5.91 billion, an increase of $1.5 billion or 33.7% from last year. First half wheat (excl durum) receipts were strongly higher as well, rising $718 million or 26% to $3.45 billion. Barley receipts were up almost 40% to $589 million and durum receipts increased 39% to just over $1 billion.

In contrast, lentil receipts through the first half of the year were lower, dropping $267 million or 30.2% to $617 million. Cannabis returns – which have in the past disproportionately inflated farm cash receipts – declined as well, down $195 million or 10.8% to $1.6 billion.

China continued to be a large buyer of Canadian grains and oilseeds, especially in commodities used as feed for hogs, as it expands its herd after outbreaks of African Swine Fever, StatsCan said. China was the largest buyer of Canadian wheat (16.8% of total wheat exported) in the first six months of 2021.

Corn and soybean receipts through the first half of 2021 amounted to $1.01 billion and $967 million, respectively, versus $936 million and $940 million, respectively, the previous year.

Crop receipts rose in seven provinces, led by Alberta (+$1.3 billion), Manitoba (+$740.6 million) and Saskatchewan (+$638.2 million). Receipts declined in Quebec (-$59.1 million), New Brunswick (-$22 million) and Nova Scotia (-$1.5 million).

The increase in first half livestock receipts was largely attributed to gains in hog receipts, which increased 37.6% to $3.1 billion, primarily as a result of higher prices (+30.9%). Hog prices were driven by very strong international and domestic demand, StatsCan said, noting that although the number of hogs slaughtered dropped, January-June slaughter receipts were up (+$661.3 million) from the same period in 2020 as the strong prices more than offset this decrease.

International exports also increased by 92.2% (+$176.4 million) as animals moved to the US in response to the strong American demand and labour disruptions in the Canadian pork processing sector.

Cattle receipts rose 8.8% to $4.3 billion on the strength of higher prices (+4.4%) and marketings (+4.2%). The majority of the increase was in cattle slaughter receipts, which rose 17.9% to $3.4 billion. Conversely, international exports of cattle were down $193.8 million (-31.3%) on lower demand in the US, where drought conditions and herd reductions have occurred.

Supply-managed receipts for the first half of 2021 were $6.1 billion, an increase of 5.3% compared to the same period in 2020. These receipts accounted for more than 40% of total livestock receipts.

Livestock receipts rose in every province. Three-quarters of the increase was attributable to Alberta (+$405.5 million), Quebec (+$378.7 million) and Ontario (+$356.1 million).

The drop in government payments was mostly due to higher crop and livestock receipts, StatsCan said, with crop-related payments falling $313.3 million and livestock payments down $110.4 million.

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The worst of the drought on our farm, 2021

Video: The worst of the drought on our farm, 2021

Finished swathing the field that was most affected by the drought. Much of the field will yield zero bushels unfortunately. But we are very fortunate for the rain got. Also another three reasons why we grew peas and canola together.