Statistics Canada recently released 2020 data for operating revenues and expenses of Canadian farms. I thought I’d take a look at the information for the farms in Alberta, and specifically for farm workers.
In 2020, Alberta farms saw combined operating revenue of $22.4 billion. Their combined operating expenses came in at $19.3 billion. That left them with a combined profit (or net operating income) of $3.1 billion.
Statistics Canada reports that the average Alberta farm in 2020 saw profit of about $89,000. The average revenue per farm was $637,000 and the average expenses were $548,000.
Now granted, some farms may not have seen a profit of $89,000 last year. But given that it was an average, it means there were some that saw profits even higher.
Now, the data doesn’t get very granular when it comes to employee data. The best we have is how much farms spent on salaries and wages.
In 2020, Alberta farms spent $977.3 million on salaries and wages, or 5.1% of total expenses. The year before, total expenses for salaries and wages was $859.9 million, or 4.8% of total expenses.
When broken down per farm, the average amount each farm spent on wages in 2020 was just $27,789, which was up from $25,279 in 2019.
Now, that might not seem like much. After all, who could live off less than $30,000 a year.
Keep in mind that a lot of farms, especially the smaller ones, are family run farms, where family members contribute to the labour in the same way members of a city household might contribute to family chores. And by that, I mean without a paycheque.
For example, the data shows that in 2020, farms with revenue between $10,000 an $25,000 declared an average of $16,603, but they paid just $129 in average salaries wages. Yes, you read that right: one hundred twenty-nine dollars.
In fact, in small farms like that, expenses were higher than revenue, at $22,069, on average.
Even if we look at farms with revenue between $100,000 and $250,000, the amount paid out in salaries and wages isn’t that much more impressive. The average revenue per farm in this group was $161,634, but average payout for salaries and wages was still only about $4,000.
At least expenses were less than revenue for this group.
However, the story changes when we look at larger farms.
Farms bringing in over $2 million in operating revenue in 2020 and a combined revenue of $13.7 billion, which averaged out to be about $7.7 million per farm.
Expenses were $12.2 billion combined and averaged about $6.8 million per farm.
For this group, about 5.1% of their combined expenses went to salaries and wages, which worked out to just under $350,000 for the average farm.
Again, there’s no indication in the data how many workers that went to.
What’s interesting is that how much these large farms spent on salaries and wages pretty much stayed the same as in 2020, increasing just 0.15%. Yet net operating income was up by nearly 28%.
|Salaries & wages||$348,389||$348,912||0.15%|
|Net operating income||$191,232||$404,333||27.75%|
And when we adjust for capital cost allowance, the picture doesn’t get much better.
Capital cost allowance is an annual deduction that Canadian taxpayers can claim on assets they own that depreciate in value. It’s typically allowed for assets that are expected to last for several years—like buildings and real estate, for example.
By claiming capital cost allowance, it lowers their profit, which, in turn, lowers how much they have to pay in taxes.
For this group of larger farms, it basically cut their 2020 net operating income in half, dropping from $855,099 to $404,333, on average.
And while that seems much less impressive, we should note that profit adjusted for capital cost allowance in 2020 ($404,333) was more than double what it was in 2019 ($191,232).
So, whether we look at net operating income increasing by 27.75% between 2020 and 2019 for larger farms or CCA adjusted net income increasing by 211.44%, it’s still a much larger increase than the 0.15% increase that was paid out in salaries and wages.
One thing to keep in mind is that it’s possible some farms determine wages based on revenues and net income from the previous year, so if 2019 was a particularly bad year, then it would make sense that corporations like large farms would cut salary expenses in 2020.
However, net operating income increased by 2.34% in 2019.
While 2020 may have seemed a pretty good year for these large corporations, at least as far as profit goes, it doesn’t seem like it was as good a year for the farm workers.
Oh, and in case you might be thinking this was a problem all provinces faced in 2020, take a look at these two charts, comparing all 10 provinces.
Three provinces saw a decrease in how much the average farm paid out in total salaries and wages, between 2020 and 2021. Of those that saw an increase, Alberta’s was the lowest increase.
But when we look at the change in net operating income, we see that Alberta saw the second highest largest increase in average profit per farm among large farms.
So, the second largest increase in Canada for profits among large, corporate farms but the smallest increase for worker wages.