Agriculture and Agri-Food Canada (AAFC) predicts a strong outlook for the country's ag industry in the short and medium terms. In a report released last week, AAFC predicts farm incomes from 2015 will reach record levels for Canadian farmers, and will remain above average in 2016.

Keystone Agricultural Producers president Dan Mazier disagrees. He says commodity markets softened in 2015, while expenses added up quicker than profits.

"Fertilizer prices are still probably pretty high right now compared to how much the grain markets have softened — but also our taxes (are adding up). Things like school taxes, provincial taxes, all these other issues are showing up in our expenses column and chewing away at our net income," he says.

Mazier also thinks production issues from 2014 may have carried over financially into 2015, noting the flood issues from two years ago.

"There were some major flood issues in southwestern Manitoba," he says, "our farm got hit with one of them... There was almost a million acres lost in 2014. It takes 18 months to kind of follow through the whole system... so our production should be down given the lag in that whole system."

Mazier does think, however, that the low Canadian dollar — which started to weaken last year — continues to benefit Canadian farmers.

AAFC's report says the weak loonie has improved the competitiveness of Canadian agriculture and agri-food products in export markets, contributing to higher farm cash receipts.

AAFC's director of farm economic analysis Rodney Myer says the drop in oil prices has also been good for Canadian farmers.

"We're still a few months away from the growing season when fuel usage is heaviest," he says, "if these price levels persist throughout the year, producers could see at least a further half-billion dollars in fuel cost savings in 2016, on top of the approximately half-billion they saved in 2015 from lower fuel costs."

Myer says the low fuel prices have been able to offset input costs, which have risen due to the weak loonie.