Value of Canadian Farm Output Rises

OTTAWA - Jun 15/05 - SNS -- The value of agricultural production rose 1.8% in 2004, reports Statistics Canada. Among the major factors that contributed to the value were the sales of agricultural products, program payments and the value of inventory change.

The sales of agricultural products rose to $38.2 billion in 2004, after falling almost 10% in 2003. The 2004 level remained slightly over the previous five-year average (1999 to 2003). However, 2002 and 2003 were years where the consequences of back-to-back droughts and the closure of the US border to live cattle exports were strongly felt, which weighed down the five-year average.

The increase in 2004 was mainly due to the sale of agricultural products to other sectors, which grew 6.9% to $31.6 billion. Higher revenues for crops and hogs in particular pushed sales up. For hogs, the jump was due largely to higher revenue from domestic slaughter. Hog prices strengthened throughout 2004 as a result of robust exports and strong domestic demand.

For crops, production of grains and oilseeds returned to more normal levels in 2003 following two consecutive droughts in Western Canada (2001 and 2002). This contributed to substantially higher deliveries for most major crops between January and June 2004 and higher Canadian Wheat Board payments.

Program payments reached a record $4.9 billion in 2004. Payments remained well above the previous five-year average of $3.4 billion. Canadian farmers received over $1.1 billion through BSE-related programs in 2004. Withdrawals from the government portion of the Net Income Stabilization Account reached record levels in 2004 as farmers withdrew $934 million from their government accounts. The Canadian Agricultural Income Stabilization program, implemented in 2004, delivered $777 million.

The value of inventory change increased by $1.5 billion. Back-to-back droughts in Western Canada sharply curtailed farm grain and oilseed inventories by the end of 2002. Consequently, the return to more normal production levels in 2003 and 2004 helped farmers to increase inventories. In the same way, the BSE crisis forced producers to keep their livestock on the farm, causing an increase in inventories.

As a result, the total value of agricultural production edged up to $47.1 billion. All provinces except New Brunswick and Manitoba recorded increases in the total value of agricultural production.