The Value of Off-Farm Income

Sunday, October 16, 2022

Canadian farmers continue to work at finding the balance in the budget.

By Colleen Halpenny

Whether you call it moonlighting, a side gig, or bonafide employment, many pork producers are known for more than their farm and take on extra work to pay the bills.

With everyone regardless of lifestyle or job sector feeling the pinch of increasing living costs, how are producers making ends meet?

We spoke with those in the industry to find out why, and how, they're turning to outside income to support their needs.

Mike Mitchell, owner of a contract finishing operation in Parkhill, Ont. and a board member with Ontario Pork, views his off-farm time as a modern succession plan.

"Like many others, when the pandemic hit, our original plans to expand the operation by two times came to an immediate stop. Uncertainty for processing options, as well as building materials, really made us rethink our plans," he says.

A recent press release from Statistics Canada reviewed the total income of farm families for 2019 and highlighted that being a self-employed business owner didn't exclude farmers from the need to increase income.

In fact, it noted that employment income was by far the most important component of off-farm income, representing about two-thirds of it in both unincorporated and incorporated sectors. Off-farm income accounted for 64.4 per cent of the total income of farm families in 2019, up from 62.9 per cent in 2018, stated the release.

"What we came to realize, as our children now range in age from 14 to 17 years old, is that any big changes we would make would have a greater impact on their future," says Mitchell. "And at the end of the day for both myself and my wife, the goal is for the farm to continue for the next generation."

He and his wife both took on different off-farm positions to allow more space at home since their children were doing remote learning. "Being able to have them explore their passion for the business, and take on more responsibility, and start to build their vision has been really exciting to watch," he continues.

Dave Semmelink, owner of mixed livestock operation Lentelus Farms and a custom processing business in Courtenay, B.C., says, "I tried everything I could to get away from farming. I grew up in the industry in South Africa and when we immigrated when I was 18 years old, I threw myself into many other career streams during and after school.

"After almost a decade of working off-farm in the foresty sector, I could not deny the pull any longer. So I worked hard to find a way in which I could start from scratch. I took out loans to start my business, and within a year I quickly realized I had no way to make ends meet without the off-farm income. I needed to support the farm and help it grow. So now I teach at a local college, sharing ag knowledge with youth, and have now expanded the business to include custom processing.

"My goal is that the farm can grow to a state where it can support me, instead of me supporting it.

"But to grow it to that level, I need to take out debt – and to service that debt we need other outside sources of income," Semmelink adds.

"I try to view the off-farm income as a way to mitigate our risk. There's no guarantee with Mother Nature or costs of inputs, and you're limited on how fast you can grow. This avenue is a buffer, allowing us to grow the business equity," states Clinton Monchuk, a Lanigan, Sask. farmer who is also executive director of Farm and Food Care Saskatchewan.

Monchuk explains that "the drought of 2021 was a bad year for many producers. For some, if there previously wasn't a cushion to rely on or these stable secondary positions, they could be feeling the pinch now."

Mitchell says the switch to being off-farm was a major transition.

"I was home full-time for 20 years, and then suddenly I'm spending my days out at industry events and talking with other producers instead of spending my days quietly in the barn.

"Being able to work from home, or take calls from the truck, keeps things flexible so I can still be where I need to be while also offering the kids more responsibility," offers Mitchell. "My board position allows me to learn how to best meet the needs and future goals of the farm, and my sales position gives me more contacts and knowledge to determine what the farm could be utilizing to excel."

Semmelink agrees that a flexible schedule is a bonus. "Having the flexibility to get some additional farm jobs done ahead of time if I know my teaching job will be busy keeps things running smoothly. And alternatively, when I know I'll be busy with planting or harvest, I can block that time off from the college and focus my time where it is best spent.

"I've also decided to be less diversified in the crops and range of products we offer.

"It seems counteractive to produce less, but ultimately we'll be more profitable this year because of those cuts. And still, I'd be more profitable yet if I stopped farming and just focused on the processing and teaching aspects – but even as we're talking I want to get out on the tractor and go sort the pigs."

If you're going to be away from the farm, you need to know that those who are at home can still meet the day-to-day objectives. "Your time away can't be detrimental to the overall success of the business just to simply supplement income," says Monchuk.

"My brother and I are able to make my job with Farm and Food Care work because he's home full-time. Until we grow to a position where it doesn't make sense for some of my time to be away, we're finding the best balance. And with my job I can keep flexible hours. Not every secondary position can offer that balance," he adds.

Statistics Canada's reporting also reflects an aging farming population. The increase in average off-farm income reflected growth in most of its major components. Pension income (+5.7 per cent) rose the most from 2018, followed by investment income (+2.1 per cent) and total other income (+1.7 per cent).

Monchuk remembers growing up on a dairy farm, which kept everyone tied to the barn daily. "Our mom was a nurse, and then the workload had increased to the point where she stopped so that she could be home full-time. We were younger at the time, so I don't recall the ins and outs of it, but they made it work, whatever the logistics were. And they were very happy being able to work alongside each other."

Producers agree that timing is everything.

Even the timing of COVID worked in Mitchell's favour. "It's hard to imagine saying, but I think the pandemic was the best thing for our farm. It took the focus from ‘right-this-moment' plans to ‘what's best long-term for our kids' business' plans.

"We've been able to stabilize income through volatile markets, but continue to put away for the future and offer a smooth transition for the next generation," he says.

For Monchuk, farming is "all about your passion and drive. Having that ability to slowly get in through grants or incentive programs, while having that off-farm income to ensure no income needs to be pulled from the business in those early years.

This allows you to grow equity, expand the farm, and get to where your goals are faster in a more stable environment."

Producers will also agree that farming is tough, but being able to make it work is rewarding. "Farming is something I knew was hard work, and some days I still question why I'm fighting so hard to just make it work," Semmelink says.

"At the end of the day, doing what I love and knowing I'm doing it from the ground up makes it so rewarding that I can continue to justify the extra hours and stressful days." BP