Manitoba Agriculture, Food and Rural Initiatives

Livestock Commentary

May 30th, 2008  

Last week Statistics Canada released the Farm Cash Receipts – First Quarter 2008 and the revised Farm Income Estimates for 2007.

Highlights for Manitoba include:
Total farm cash receipts in 2007 jumped 17.1% to $4.3 million as increased market receipts from the sale of crops more than compensated for lower livestock receipts and program payments. Market receipts, the total value of crops and livestock receipts, hit $3.9 million in 2007.

Crop receipts jumped to $2.2 billion in 2007, rebounding from lows in the previous two years. Growing conditions improved for Manitoba producers and prices for grains and oilseed continued to climb.

While much of the crop receipt increase was price driven, higher deliveries were also a factor in Manitoba. The 2006 and 2007 harvests were a significant improvement over those of the preceding two years, when flooding and excess moisture affected both the quantity and quality of most crops.

Livestock revenues fell 3.2% in 2007, as cattle, calves and hogs all recorded declines, pulled down by lower prices. Prices were pressured by a strong Canadian dollar and higher feed grain prices, both of which stimulated record movement of feeder cattle and hogs south of the border.

• Total farm cash receipts for the hog sector were $800,311,000 in 2007 and $169,021,000 for the first quarter of 2008, 24% lower than the year before.

• Farm cash receipts for cattle totaled $469,657,000 in 2007 while calf receipts were $19,473,000. During the first quarter 2008 cattle receipts totaled $118,740,000 down approximately 5% compared to the same period last year. Calf receipts for the first quarter 2008 were $4,788,000, 46% lower than last year.

Farmers received $413 million in program payments during 2007, 9.6% below the previous five-year average. Two factors contributed to the decline: the phasing out of the Farm Income Payment program and lower crop insurance payouts in the wake of improved growing conditions.

• Farmers received $413 million in program payments during 2007, 9.6% below the previous five-year average. Two factors contributed to the decline: the phasing out of the Farm Income Payment program and lower crop insurance payouts in the wake of improved growing conditions.

• Rising costs of fertilizer and feed together with higher interest expenses boosted operating expenses 9.9% to $3.6 billion, the fastest increase since 1994. Fertilizer expenses, which jumped 31.3%, were responsible for most of the increase. Livestock producers also faced much higher feed costs as feed grain supplies tightened and grain prices climbed.

• Interest expenses were up 13.2%, driven by higher debt levels, coupled with increased interest rates.

Despite an increase in the total value of agricultural production, net value added dropped 7.5% in 2007 to just under $1 billion, 5.9% below the previous five-year average.

• Net value added measures agriculture’s contribution to the provincial economy’s production of goods and services in a particular year. It is derived by calculating the total value of agricultural sector production—including sales to other farms, the value of inventory change, custom work and program payments—and subtracting the related cost of production (expenses on inputs, business taxes and depreciation).

• The income earned from production activities in the farm sector is distributed among producers for their contributions of land, labour, capital and management, and to other stakeholders in the form of interest charges, wages paid for non-family labour and rental payments to non-operators.

• In Manitoba, 65.4% of net value added was paid to other stakeholders in 2007. This compares with the previous five-year average of about 50%.
First quarter 2008 farm cash receipt estimates for Manitoba’s major commodities are listed graphically in the Manitoba Markets Graphic Index at: http://www.gov.mb.ca/agriculture/news/markets/livestock/graphs2008index.html