7 ways Canadian agriculture will stay healthy into 2018

Farm cash receipts across Canada’s major ag sectors continue to show strength, a trend that should last until the middle of 2018. With those strong revenues, Canadian ag profitability should also remain positive through the outlook period.

7 sectors: 7 positive growth trends

That growth, measured at the national level for most sectors, will vary, ranging from the low, an expected 2% in average annual revenues gains in Eastern Canada’s grains and oilseeds (corn and soy) to the end of 2018, all the way to a high of 12% growth in the hog sector. We forecast cattle receipts to increase 8% and poultry to increase 7% by July 2018. Dairy, whose revenues we forecast to grow 11% in the next 18 months, may surpass our projection, and easily, with recent news about production growth.

There’s also good news for the farm equipment sector that experienced slower sales growth of combines and 4WD tractors between 2014 and 2016. Their sales will grow in 2017 and 2018, not likely to the peak reached in 2013, but higher than their most recent levels.

Western grains and oilseed (wheat, canola and lentils) revenues will likely decline over the outlook period, by a modest 2%. Given that the previous two years’ receipts were record-breaking, this still bodes well for the sector.

Farm financials also look to be strong

The general picture of farm financials over the outlook period also looks stable. FCC Ag Economics expects farm debt levels to grow at a rate that will support needed expansion in Canadian agriculture. While interest rates are expected to increase slightly, they’ll remain historically low, also supporting farm health.

We expect the loonie to average US$0.78 throughout the second half of 2017. This is one of the reasons Canadian agriculture should continue to outperform the U.S. into 2018, helping to push up receipts here and making Canadian exports more competitive in world markets.

How did we get here?

Revenue growth in a number of ag sectors has registered some record highs in the last five years. 2015 and 2016 were banner years for grains and oilseeds; the livestock sectors had their highest revenues in 2014, and then a bump in 2017.

For more detail about each of the seven sectors’ revenue forecasts, see FCC Ag Economics’ economic snapshots series. Also, watch for our newest report, Outlook for Farm Assets and Debt 2017-18, to be released September 12.

Martha Roberts
Economics Editor

Martha is a Research Specialist with a focus on economic performance and success factors for agricultural producers and agri-businesses. Martha has 20 years’ experience conducting and communicating quantitative and qualitative research results to a number of different audiences. She holds a Master of Sociology degree from Queen’s University in Kingston, Ontario.