by SUSAN MANN
For the first time in Canadian history, less than 10,000 large farms are responsible for more than half of the farm product sales across the country, says Western University professor David Sparling.
The farms doing the majority of sales across Canada are the large operations with more than $1 million in annual sales, says Sparling, chair of Agri-Food Innovation and Regulation at the university’s Richard Ivey School of Business.
That’s just one of the findings outlined in a paper by Sparling and Nicoleta Uzea updating their previous analyses of farm business structure and performance.
“The largest 2,500 (farms) are selling more than a quarter (28 per cent) of all farm products,” he says. “There’s a shift that’s happening and it has been happening for years. But all of a sudden the big farms are getting really significant because they make up more than half of the production.”
The big farms have “way higher incomes because they’re doing lots more sales” than medium-sized operations, defined as ones with $250,000 to $1 million in annual sales, and small farms, which have less than $250,000 in annual sales and really small operations that have less than $100,000 of sales a year. The large farms also have a higher return on assets and equity and invest far more than the other categories of farms, “which means they’re going to keep getting bigger,” he says. “They make more money, have way more resources and a higher return on equities.”
“There are big economies of scale in farming that just encourage farmers to continue to get bigger,” Sparling adds. Technology, such as bigger tractors, GPS systems and precision farming, help farmers to manage bigger acreages or larger livestock operations.
Technology has helped farmers to get bigger in the past but now it’s accelerating the move to larger operations.
Sparling says owners of smaller and medium-sized farms need to consider how they will compete because they won’t be as cost competitive as the really big farms. They need to consider what they will produce that has a higher value and maybe a smaller market.
For example, farms of 100 acres might go into specialty vegetables and market them locally rather than as commodity grains.
While some people lament the loss of family farms, Sparling says these big farms are almost all owned and operated by families. The difference now, though, is instead of a single person or a couple running the farm, entire families, such as parents and possibly siblings, the grown children, as well as other relatives, are running large operations.
“One person will be the crop person, another person might be the animal person, somebody else might be the marketer; so you get this whole mix of skills,” he says.
Another development on the farm financial front is Statistics Canada released a number of charts and tables this month dealing with farm financial numbers covering several years. For example, the average net worth per farm has increased to $1.7 million in 2011 from $1.2 million in 2007. Total farm cash receipts were $54.2 billion in 2012, up from $46.1 billion in 2008.
Canadian Federation of Agriculture president Ron Bonnett says there is nothing surprising in the numbers. The numbers are showing increasing income for some of the crop farms. The numbers are also showing that some of the program payments for livestock operations are down “and reflects the fact that the reference margins (used to calculate payments) have slipped because of long-term losses, particularly in pork and beef.”
Bonnett says for supply-managed commodities, the numbers are showing income as being steady and strong but again that’s not a surprise.
Off-farm income was starting to decline a bit as a percentage of total income and Bonnett says that might indicate some of the smaller farms are disappearing.
One of the impacts of the long-term income declines in the livestock sector is farm groups and governments need to look at risk management programs. The reference margin slips mean “the program payments weren’t there to help them (livestock farmers) through the hump,” Bonnett says. BF
Comments
Very interesting
"One of the impacts of the long-term income declines in the livestock sector is farm groups and governments need to look at risk management programs. The reference margin slips mean “the program payments weren’t there to help them (livestock farmers) through the hump,” Bonnett says." One question Bonnet and CFA/OFA need to be asking is why is Canada supporting livestock with millions of dollars in margin program payments and special buyout programs plus RMP when Canada competes with U.S. ? Furthermore, why is the livestock Agristability cap set at 3 million dollars?
Federal and Provincial gov'ts have too look at what kind of "farm structure" they want in the future as risk management programs with no or very high caps and high protection just means the big farms will continue too grow and can outbid any younger-smaller farmers as a lot of risk in farming is mitigated . We fall in large dollar farm sales and have collected from many programs over the years but it seems that money gets bid back into land,machinery,buildings,ect at higher price levels. Farming is really not a "free enterprise" business as many farmers think when you have really good gov't support programs and SM . SM is a great business structure if the "quota" value could be dealt with i.e. after holding quota for X number of years it gets returned too the "boards" on your retiring or leaving the industry . With $10k land being common and machinery prices or needing $5 mil. too set up in a SM commodity young people wanting to enter Ag. as owner-operators will need to either inherit or marry it . I am sure we have already moved too the point where , in Ontario anyways we will just continued consolidation in all commodities . Sadly many of our ancestors left Europe too escape being a "tenant farmer" or serf . kg kimball
If 'quota" values could be dealt with, the gov't would stand to lose money. All things surrounding quota values generates financial benefits to the gov't. They wont give up a "cash cow" just yet. And you forget. Buying or renting land is buying or renting production quota. There is only so much land and farmland allows for farm production. There are 2 types of quotas. Every farm has production quota. The farm acreage.
The land doesn't have import tariffs protecting it only the sm quota does your argument is invalid
You need the land first to produce anything. Tariffs comes after production. Production quotas first, marketing quotas second. People renting land are engaging in the use of production quota.
In another sense there is quota on things like hogs. There are a limited number of sites in Ontario where you can get zoning permission to produce. That limited number is a barrier to entry just like quota is for dairy. There are limited numbers of openings for doctors in Ont and that's another kind of supply management.
Once companies get big enough they control things without formal quota. When you just have a handful of grocery chains they effectively control the market and ditto for oil or utility companies. SM isn't perfect, no system is, but in theory it gives smaller organizations an opportunity to manage risk.
Who gets the money and discounts not the Medium or Small Farms the Big guy its not rocket science to understand that. SM farming is geared to that the big guy gets 3 days quota for the month as same as the others but they get 200 to 500 or 700kg per day and the smaller ones get 40 to 100kg per day and who do you think is coming out ahead at the end of the month. You go in and buy a half ton load of feed and the big guy get a couple tractor trailer load delivered to his farm , who is going to pay less for their feed per ton. Get 2100kg free milk to send for the month compared to say 300 , who will have more money to buy that farm next door or that new tractor or equipment? Wish the ones that write these stories do a little studying and report the whole thing why these big hogs are getting bigger faster than the other ones.
I read recently that an 8% pay raise for OPP officers means almost every officer in Norfolk County will earn over 100K plus with generous holidays. They have a nice pension and benefit program too. Hiring another police force isn't an option for the municipalities there. These cops have no investment in the business and they have no big cost of living/production increase. Farming is statistically more dangerous than policing.
Hard to believe that we have farmers here bashing supply management when there are so many better targets to vent their anger on.
Its no only the OPP look at all the government workers, have a mandate to suck all they can out of this country and they are doing a really good job too. Don,t anybody look at our elected officials and say my we vote them in and what do they do , keep giving themselves raises and if anyone ask why they say look at the CEO,s of those large companies how many millions they make a year to run a company. Its easier to stomp on a small guy with their head out of the sand than climb a one legged step ladder and stomp on a big one. Look at those other countries that protest for big change and it looks like they,re no better off now than they were before. Hope its not to late for the working Canadians to stand up before its that far gone and when people do rebel its not to late to go back to a peoples Country, not Government Country.
The OPP Officers have certainly benefited from an oligopoly for many decades. Many municipalities have been complaining for years about the rising cost of policing. Soon, it will be more cost effective to hire a local person, send them to a 2 year Police Foundations college course (or hire somebody who already graduated), then start them at half the salary of an OPP officer.
Every municipality has that choice today.
Unfortunately, the rules of Supply Management has taken the alternative away from all Canadians so that 2,700 millionaires can become billionaires at the expense of all Canadians who have trouble feeding their families due to the triple cost of Supply Management goods.
Soon the Supply Management monopoly will be broken, for the Supply Management leaders are arrogantly overplaying their hand, and will soon push Canadians too far, and the system will soon collapse on their heads.
Glenn Black
Small Flock Poultry Farmers of Canada
You may be having a hard time getting over the fact that small farms are disappearing but we have known and seen that for years in every agr-sector.Whining about the cost of policing will not change that.
You say that small farms are out, get over it.
We disagree.
Small Flock Poultry Farmers of Canada (SFPFC") believe that small farms, including small flock poultry farms, still have an important role to play in the Canadian food system.
Statistics Canada shows that 98.94% of farms with chickens have disappeared since 1921 (see our Blog for details). Still, in Ontario there are more than 13,000 small flocks, but only 1,411 quota-based chicken farmers. Small Flockers still outnumber the factory farmers by almost 10 to 1.
People want locally grown food. Small Flockers are already meeting that need.
People want nutritious food.
Contrary to what the public wants, factory farmers have doubled the rate of growth through hybrid genetics, 100% grain fed, plus the use of arsenic (banned in Aug. 2012), caffeine, antihistamines, Gravol®, banned antibiotics, and Prozac-type psycotropic drugs. These "modern methods" have totally distorted the bird's metabolism, shifting its Omega-3:Omega-6 ratio to the bad side, and other similar mutations to our food system. No wonder we have numerous epidemics of nutrition related diseases rise within the last 40 years.
People want safe food.
In spite of this desire by the public, CFIA, University of Guelph, and OMAF studies have found that the factory farm birds that go through high speed processing equipment get contaminated with feces which is only partly washed off, so that 30% to 80% of the birds sold at retail meat counters in Ontario are still contaminated with salmonella, campylobacter, E.Coli, listeria, and similar pathogens. Of the contaminated birds, 50% of these pathogens are so-called Super Bugs which have resistance to multiple antibiotic drugs, often due to the regular feed of antibiotics to the birds while they grow.
Small Flockers believe in a sane, more natural growth regime and diet for our birds.
As the public's awareness of these issues builds, we believe Small Flockers will have a growing importance in the supply of safe, affordable, nutritious foods for all Canadians.
David was considered the underdog when he volunteered to go up against the giant Goliath. Everybody thought David was done for, until he pulled out his sling and a small stone from his pocket. When the crowd saw the sling, they suddenly realized that David had a chance. Goliath never knew what hit him.
Sometimes history repeats.
Glenn Black
Small Flock Poultry Farmers of Canada
Open your eyes ,if you think that SM farmers are the only one out their that is charging outrages prices. How is your hydro bill, Taxes and your Gas bills. Maybe Toronto can hire a couple of people to police it and operate out of their car? Do you not think that you also need staff , building and supplies to operate a police structure in any community not just a person to drive around with a gun? Its nice to see people comment on things that never put an ounce of thought into it before they start writing. Yes the police is getting paid excess money and can use a trimming in the wages department, but also all the government workers deserve and need a trimming in their wages that is like a rocket shot into space.
In response to most of the anonymous gibberish posted below. 1. A police officer is not an occupation you can inherit. 2. ANYONE can become a police officer without having to become a financial slave to FCC or the banks, just a an education. Police officers wages come out of the public purse-as they should. 4. There are no tariffs on police officers. 5. Land is not quota by definition. And finally, I feel like when I respond to most of the anonymous comments on this site, that I am justifying their stupidity. Raube Beuerman
I guess there is some people that can sign their name and know everything? Having the government protect your job and wage , Is it no different than them protecting the SM farmers from out side interference . How do a person inherit an SM farm , the child or children will likely have to work for their share or come up with money to buy it unless they are very spoil and have it handed to them which is no different than having parents that are multi- millionaires and handing it to you. Government workers are protected by the government and its unions ,and I would like to know what Country you live in.
Do a little research and you will discover that being a police officer is a job inherited by many.
Anonymous Gibberish
Comments like this are embarrassing, and so ridicules to think there are people in our industry who are this distorted just shows how weak our industry might actually be, Lets hope these comments are from some one not involved in agriculture. I think when people sign their comments it adds a level of credibility to the point their trying to make, regardless if i agree with some ones ideas or not i like to know who i am debating to get a better understanding of where they are coming from.
Sean McGivern
The real sad part is , in a lot of cases the poster is correct. I know
several people that were hired on police forces for one reason only and that was because one or both of their parents were also officers. While you may not like it, the poster has a point.
Judging by what I see, you may be thinking about Hydro One. Amazing how many families there are with 3 or 4 members working there, and always a job available for someone with a family connection.
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