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.

The report also says the low Canadian dollar 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.