OTTAWA
,
February 15, 2024
(press release)
–
The value of equity in Canada's farm sector totalled $729.9 billion as of December 31, 2022, up by $83.6 billion (+12.9%) from the same date a year earlier. This was the largest percentage increase in farm equity since the beginning of the series in 1981. Every province reported growth in farm equity, ranging from 3.4% in Newfoundland and Labrador to 16.8% in Ontario. Equity gains in Ontario accounted for more than one-third of the national increase. The value of total assets grew by $92.3 billion (+12.0%) to $861.5 billion as of December 31, 2022. More than four-fifths of the growth came from gains in farm real estate, up $76.4 billion (+12.8%). The value of farm real estate rose in every province, led by Ontario, where it rose by $30.9 billion (+17.7%) to $206.0 billion. In 2022, the Farm Credit Canada Farmland Values Report showed that the average farmland values recorded their highest percentage increase since 2014. Farmland values grew despite rising interest rates and were supported by higher commodity prices and a limited supply of farmland for sale. The value of crop inventories was up by $9.3 billion (+43.6%) to $30.7 billion as of December 31, 2022, the largest annual percentage increase recorded since the start of this series in 1981. The gain was attributable to higher prices for most principal field crops, as well as improved yields, which were due to better growing conditions in 2022, leading to higher end-of-year stocks for Canada. Poultry and market livestock inventory values rose by $1.6 billion (+17.8%) to $10.9 billion as of December 31, 2022, on stronger prices for market cattle, which were supported by higher export demand. Every province reported gains in poultry and market livestock inventory values, with Alberta (+$820.1 million), Ontario (+$285.9 million) and Saskatchewan (+$222.0 million) accounting for more than four-fifths of the national increase. The value of total liabilities rose $8.7 billion (+7.1%) to $131.5 billion as of December 31, 2022. Most of the increase was due to an $8.5 billion gain in long-term liabilities. Total liabilities increased in every province, with Quebec (+11.0%), Ontario (+6.8%) and Saskatchewan (+6.9%) accounting for over two-thirds of the national increase. The interest coverage ratio, which measures the ability of the farm business to meet its interest payments, rose from 2.895 in 2021 to 5.305 in 2022. This was the highest ratio since 2013, when it was 5.825. A higher interest coverage ratio (net income before taxes plus interest expense, divided by interest expense) indicates businesses' stronger ability to repay their debt commitments. Improvement in the ratio occurred despite interest rate increases in 2022 and was driven by a rise in total net income, which was the result of higher crop production and year-end inventories.Chart 1
Year-over-year percentage change in the value of total assets, total liabilities and equity, 2021 to 2022
Total asset values rise on continued appreciation of farm real estate
Total liabilities continue to increase
Chart 2
Solvency ratio—debt, Canada, 2008 to 2022
Interest coverage ratio rises to highest level in almost a decade
Chart 3
Efficiency ratio—interest coverage, Canada, 2008 to 2022
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