Farm economy mid-year check-in highlights slowdown in revenues

Statistics Canada published today their estimates of farm cash receipts for the second quarter of 2024. As usual, let’s emphasize that a full assessment of the health of the farm economy needs to look beyond revenues and account for costs. So the picture below is incomplete Yet farm cash receipts provide a look into production trends at the farm level and the strength of demand farm operations face.

Total farm cash receipts were 3.2% lower in the first two quarters relative to the same period a year ago. That’s an improvement over the Q1 performance when cash receipts trended 9.1% below last year.

A big part of the slowdown is related to the decline in receipts for grains, oilseeds and pulses. The Q2 numbers come in 20.2% lower than a year ago. We should see this gap shrink in the second half of this year because of an expected above-average 24 crop. Yet lower prices will weigh on receipts overall.

The mid-year report card isn't negative for all crops. Greenhouse vegetable receipts are up 6.2% over last year. Fresh fruit and field vegetable receipts only account for a small share of annual receipts, so the jury is still out to asses revenues. But many fruit sectors experience significant production issues in 2024, so the trend in revenues is important to monitor in Q3 and Q4. On the positive side, maple syrup receipts hit a Q2 record after a disappointing 2023, with a 91.2% increase YoY. ?

Livestock receipts generally trended up for the first six months. Dairy receipts recorded an increase of 2.3% after a challenging Q1, driven by a higher milk price.

Eggs and broiler receipts recorded opposite trends. Eggs were up 5.0% while broiler receipts were down 1.2% YoY. Hog receipts climbed significantly YoY, an increase of 9.5%. But that’s off a weak 2023, and the year-to-date receipts in 2024 are below the levels recorded in 2022. The good news is that hog producers now face lower feed costs as grain prices have trended down.

Finally, cattle receipts continue to march upward. They recorded a 15.7% increase, YoY in Q2 after recording a 21.3% increase in the first 6 months of last year. Once more, caution needs to be exercised: a pure focus on gross revenues hides the fact that costs have been climbing for feedlots.

The decline in farm cash receipts for the first half of 2024 underlines the pressures on commodity prices, mostly in the crop sector. Farm operations can focus in the second half other year on 1) gaining efficiencies as profitability is expected to remain tight; and 2) managing risks given production challenges are bound to arise. Safe and successful harvest everyone!