Definitions Used in Farm Finance

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Cash receipts:
Cash received by producers from the sale of agricultural commodities, as well as direct payments made to producers under farm insurance and support programs. Receipts are estimated on a cash basis and represent the value of sales when ownership first changes hands. All inter-farm sales within the province are excluded; however, sales to farms in other provinces are included, as are intra-provincial sales to all sectors other than the agricultural sector.

Operating expenses:
Represent business costs incurred by farmers for goods and services used in the production of agricultural commodities. Where direct rebates are paid to farmers to reduce the cost of particular inputs, the net expense estimates are used. As well, input flows between farms in Alberta are excluded. All expenses are estimated on a calendar year basis.

Net cash income:
Obtained as a difference between cash receipts and operating expenses, net cash income is a measure of cash flow during a given calendar year.

This measures the value of agricultural commodities produced on farms and consumed by individuals living on these farms. The home-consumed products are valued at prevailing market prices; thus, income-in-kind represents the receipts producers would have received had the products been sold.

Depreciation charges:
These charges are intended to account for the loss in fair market value of capital assets. They measure the loss in value of farm land and buildings on owner-occupied farms (including the farm business share of houses), and machinery (including farm machinery and equipment, and the farm business share of automobiles and trucks).

Realized net income:
Is the residual income from farming operations after income-in-kind, all production costs and depreciation charges have been accounted for. It represents the after-expense earnings from farming operations available to the farmer for debt servicing, savings, investments, personal consumption, and taxes.

Value of inventory change:
Measures the value of the change in producer-owned inventories between the beginning and the end of the calendar year. The physical changes in crop and livestock inventories are valued at weighted and simple average annual market prices, respectively. The sum of cash receipts, income-in-kind and value of inventory change represents the gross value of agricultural production.

Total net income:
Represents the return to operator's equity, management and risk, and includes unpaid family labour earned during the reference year.

Farm debt outstanding:
Represents the total amounts of debt outstanding to agricultural producers as at December 31 of each year. For those lending institutions that report data based on a fiscal year year-end, March 31 is used to represent the debt at December 31 of the previous year. Statistics Canada has determined that the impact of this procedure on data accuracy is minor.

Value of farm capital:
This is an estimate of the market value of capital employed in the production of agricultural commodities, regardless of whether the capital is owned or leased.

For more detailed definitions and notes, please call : 780- 427-4011, or consult Statistics Canada Catalogue No. 21-603E "Agriculture Economic Statistics".

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This document is maintained by Shukun Guan.
This information published to the web on March 21, 2003.
Last Reviewed/Revised on March 10, 2017.