In its annual income forecast issued Wednesday, Agriculture Canada said aggregate net cash income will slip five per cent this year to $12.6 billion, but will still be 23 per cent above the average for the period of 2008-2012.
It says farm-level average net operating income will similarly decline by five per cent to $65,243.
Crop receipts are forecast to total $29.1 billion in 2014, three per cent below the projection for 2013, but 17 per cent higher than the 2008-2012 average.
"It is expected that there will be higher grain and oilseed marketings, but lower prices," the report said. "Increased marketings will result from large carry-in stocks that farmers held following the record harvest of 2013."
Western farmers have been complaining about a rail transport backlog that's slowing the movement of grain — one of the factors, department officials said, contributing to lower prices and higher stocks.
Grain farmers produced a record crop of 96.5 million tonnes of grain in 2013 due to historically high yields and ideal weather conditions.
Aggregate farm cash receipts for livestock are forecast at $21.5 billion in 2014, just below the record level of 2013.
"Relatively low supplies of cattle in North America and expectations of increased heifer retention should translate into fewer animals available for slaughter and higher cattle prices in 2014," the report said.
Hog prices in Canada should increase slightly due to tight U.S. supplies. There may also be ripples from the porcine epidemic diarrhea virus that hit the U.S. last year and which has been found in Canada recently.
Agriculture officials say they are watching the virus, but they add that Canadian producers generally have strong safeguards in place to keep the disease out of their barns.
Egg producers and chicken farmers are expected to see declines of nine per cent and eight per cent respectively, due to lower prices resulting from lower feed costs.
In 2014, program payments are forecast to rise by eight per cent, or $199 million, to a total of $2.8 billion.
"These latest forecasts show how the agriculture sector continues to be a strong driver of the Canadian economy," said Agriculture Minister Gerry Ritz.
"Canada's agriculture and food industry has grown into a modern, technologically-advanced, export-oriented sector that is among the elite performers in today's' highly competitive global marketplace and the outlook is bright for our farmers."
For 2013, the department expects net farm incomes will be just shy of the historical peak seen in 2012, despite a reduction in program payments and a decline in crop prices in the fall.
Net cash income for 2013 is projected to total $13.2 billion, only one per cent lower than in 2012. Farm-level average net operating income is forecast to be $68,498, an all-time high.