Farm Credit Canada’s (FCC) latest analysis of farm assets and debt indicates that Canadian agriculture continues to show strength and resilience despite higher interest rates, trade uncertainty, and volatile commodity prices.

“Our latest temperature check shows the industry is well-positioned to thrive in the current economic and financial environment,” said FCC’s Chief Agricultural Economist JP Gervais.

The report says most Canadian farms continue to be in a good financial position and the majority of producers have used debt to make strategic investments in improving their operation’s productivity.

“The current debt-to-asset ratio in agriculture remains lower than the 10-year average, both nationally and in most provinces, and farm liquidity remains healthy, despite facing challenges in the current economic environment,” commented Gervais. “Overall liquidity is still healthy, but it has taken a small hit in 2017 thanks to lower commodity prices and increasing interest rates.”

FCC’s first article in the two-part research series shows that profitability in Canadian agriculture decreased slightly in 2017 when measured against the value of farm assets, which have continued to increase. The pace of farmland value appreciation has exceeded that of income over the past few years. The second article focuses on the impact of rising interest rates on equity of farm operations.

FCC says current production challenges across the country could result in 2018 crop receipts to be lower than in 2017, however, the forecast still shows foreign demand for Canadian commodities remains strong.

 

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