Farm Credit Canada's latest outlook on farm assets and debt reflects both optimism and caution.

FCC Chief Agricultural Economist J-P Gervais says markets right now are softening a bit, so projections of farm income have come down for 2016 and 2017.

However, he says if you compare our financial position now to where it was at the end of 2015, canadian farmers are doing fairly well.

"Our ratios, all the different financial ratios have weakened just slightly but at the end of the day they compare very well to what the average has been over the past fifeteen to twenty five years so that suggests that Canadian producers are in a good position to continue to invest in increasing their productivity in order to be able to meet the ever growing demand for food."

Between 2012 and 2015, Canadian farmland values appreciated a total of almost 40 per cent, whereas in a recent report, FCC projects increases of only five per cent in 2016 and one per cent in 2017.

Gervais says this is a good sign.

"Now there is a close relation and a close connection between farmland values and farm debt and as we see farmland values level out we are probably going to see the increase in farm debt slow down as well."

Canada's current debt-to-asset ratio is lower than the 15-year average, while the national asset-to-income ratio is higher than the 25-year average.

FCC predicts Canadian farm debt will increase by seven per cent in 2016 and three per cent in 2017.