Farmers received more of their returns from the marketplace and less in government subsidies in 1996. As a result, farmers' total net income decreased. The income measurement used is total net income. This measurement is known as an accrual basis income measure. It accounts for changes in on-farm inventory and therefore provides a relatively accurate measure of the financial performance of the sector in a given year.
Farm income tends to fluctuate from year to year.
There are a number of reasons for this, including weather patterns, varying farm input costs and changes to world commodity prices. Recently, a worrying trend has developed in Canadian agriculture. More than half of an average farm operator's income now comes from off-farm sources. Much of this off-farm income is used to compensate for the income variability of the farming operation. However, the importance of off-farm income varies not only by type of farming operation, but by province as well.