Lawrence Solomon
National Post
October 18, 1999

Despite the hoopla, farms are a drain on the economy

October marks the first-ever Canadian Agriculture and Food Celebration, and Canada’s agriculture ministers — when they aren’t begging Ottawa for farm relief — are busy touting the successes of Canadian agriculture. “New Brunswick has a strong agriculture and agri-food industry which supplies high-quality food products, not only here at home but also to 26 countries around the world,” Milt Sherwood, the N.B. Agriculture Minister, declared Friday in announcing that his province — also knee-deep in Agriculture Awareness Month — would join the celebration and tell Canadians just how successful their farm policies are.

What Canadians are unaware of — and what these ministers will not tell us — is that Canada’s farmers, on the whole, don’t make a positive contribution to the national economy. While agriculture ministers boast of “the importance of the sector [to] jobs and economic growth,” Statscan puts the profit produced by Canada’s entire agriculture sector — whether on family-owned farms or on mega-farms owned by major corporations — at less than $3-billion a year. That’s much less, for example, than Bell Canada Enterprises earned last year.

But even that meagre profit is illusory. Federal and provincial governments ponied up more than $3.5-billion in direct and indirect subsidies, according to Agriculture Canada’s Data Book, making the farm sector a net drain on the Canadian economy of some $650-million annually. Data Book notes that its $3.5-billion tally is on the low side: It excludes, among others, subsidies to manufacturers of farm inputs, such as fertilizer and farm equipment. Data Book doesn’t note, but could have, that it also excludes employment insurance and other welfare payments to farmers. All that effort — 387,000 farmers working 276,000 farms — and at the end of the day, the country is the worse for it.

The losers include Canada’s urban residents, who provide the lion’s share of the subsidies through taxes and overpayments for milk and other marketing board-controlled farm products. They include Canada’s wilderness, which was needlessly cleared to make way for uneconomic farms. They include Third World farmers, who in a free farm market would have far larger markets for their produce. But most of all, the losers in Canada’s politically modified agriculture sector are found among the farmers themselves.

Without the host of subsidies and other interventions governments have devised over the years, many of today’s farmers — perhaps most — would long ago have followed their instincts and found their fortunes elsewhere. Once farm folk have seen the big city, the cliche goes, “you can’t keep them down on the farm.” But by providing farmers with cash and credit to stay put, governments persuaded many who would otherwise have left to remain. In the process, they have sown a harvest of suffering.

Governments justify farm marketing boards and other interventions by a need to protect the farm family from the ups and downs of the farm business, and the desire to create and maintain good jobs in the agriculture sector. But these measures yielded neither stability nor good jobs. Because farming is capable of fully supporting precious few Canadians, farmers have turned to a more dependable safety net than government programs can provide — second jobs. Of Canada’s 217,000 farm families — now just 3% of the Canadian population — only 8% earn 75% or more of their total family income from farming, and 65% earn less than 25% of their income from farming. Farm families earn three times as much by moonlighting in jobs off the farm than from their farming activities. As a whole, only 19% of the farm families’ average net income of $53,000 — about $10,000 — comes from farm work, while society spends more than $10,000 subsidizing the average farm.

While it is tragic for all concerned that governments have so seriously mismanaged the agriculture sector, its decline in size stems more from progress than bad policies. In the developing countries, agriculture is six times, and in the least-developed countries 16 times, larger than in industrial countries, where it has steadily declined to just 2% of GDP. In Canada, agriculture commands a mere 1.6%.

In all likelihood, this share will become smaller still. Thankfully, our federal and provincial governments are year by year decreasing their subsidies. Year by year, agriculture’s share of GDP shrinks. And year by year, the farm population contracts as farms ill-suited for a modern economy — those on poor soils, for example, or far from their markets — transform themselves to residential or recreational uses, or to wilderness.

Although the farm economy now costs the country more on balance than it brings in, many types of farming, and many, many farmers, are enormously productive and profitable. As inefficient operators leave the field, and as deregulation and globalization let productive ones show their stuff, Canada’s agriculture sector will become smaller but profitable.

Today, we have too many farms and too many farmers, but someday — in an open, entrepreneurial farm market — that may well change. In British Columbia, where immigrants are now 27% of the farm population, the farm economy is actually growing, thanks largely to Chinese and Punjabi farmers bringing the new skills and new vitality that our dispirited, cap-in-hand agriculture sector badly needs.

Agriculture “is not only about feeding Canadians’ appetites,” said Lyle Vanclief, federal Agriculture Minister, in launching his celebration, “it’s also about feeding the Canadian spirit.”

Responses to: Too many farms, too many farmers

Canadians have to answer that question: Do you want family farm to survive?

Winnipeg Free Press, Jan. 24, 2000
– Peter Schroedter, Interlake sheep rancher and agriculture commentator

“Interlake sheep rancher and agriculture commentator Peter Schroedter writes that before the farm income debate can be settled, it might first be wise to determine “Who is subsidizing whom?”

By Peter Schroedter

PUBLIC COMMENTS by the federal agriculture minister make it clear the federal government is ready to abandon more than half the country’s farmers in the next few years.

The federal politicians believe they have the public support to do it without suffering political damage. They keep looking at the fact that 40 per cent of the farmers are producing 60 per cent of the farm commodities. In an era when production efficiency is next to godliness, Agriculture Minister Lyle Vanclief is left wondering what to do with all the farmers who aren’t as productive as the top 40 per cent. With the less productive farmers gone, the way is clear for the productive farmers to expand.

The politicians are pretty sure no one who matters cares about the small-farm farmer. So much so that Vanclief is telling farmers that if they don’t like the pay they should look for another line of work. He points out that he quit the farm and made out all right.

An opinion piece by Lawrence Solomon in the Oct. 19 National Post took a bottom-line look at the farm crisis and concluded that we have too many farmers and too many farms in Canada. Solomon does a very good job in his corporate-minded analysis of the situation, but completely disregards the social, economic and long-term political aspects.

There is an argument to be made that as a nation we can buy imported food cheaper than we can produce it. It can also be said that much of the land used for agriculture could easily revert to its natural state to improve the ecology.

As distasteful as they seem to farmers, all these comments do have validity, but there’s a problem with this bottom-line, corporate-minded businesslike approach to financial support for agriculture.

What will we do as a nation when the countries that produce the cheap food use food to make us toe their policy line? Most nations already know how important food is. Maybe it’s because we’re a very young country that we produce such naive leaders who have no sense of where food production fits into history. It’s been used as a weapon to win wars and is the foundation on which great nations are built. The Americans don’t support agriculture because there is a shortage of food in the land of “all you can eat for $1.99.” They support agriculture because their leaders and policy advisers realize that unless a nation can feed itself, it cannot be truly sovereign. The Europeans, especially the British, learned this hard lesson through two world wars when cheap food from the colonies was no longer available.

That’s why these two great economic and political powers support their farmers with hard cash while our leaders talk about levelling the playing field at international trade talks. In Canada we’ve never suffered food shortages. In fact, our only food-related problem is the increased costs to the health-care system caused by too much cheap food and over-consumption.

Canada is getting ready to sacrifice its “family farm” culture on the altar of economic efficiency. The irony is that it is through the farmer’s own efficiency and over-production of almost every agricultural commodity that they have been marginalized almost out of existence.

Not many decades ago, people on the land made up 30 per cent of the nation’s population. It was a voting block politicians respected. Now farmers represent three per cent with continuing decline projected.

Not many decades ago consumers paid close to 25 per cent of their total income for food. Today they spend 10 per cent on food and 24 per cent on entertainment and recreation.

Back then a farm family could make a decent living farming 320 acres. There was even enough to put some money aside to carry them through floods, droughts and crop failures. They had a life as good, and in many cases better, than the urban wage earner.

Today, those 320 acres fall into the hobby farm and lifestyle category. A grain and oil seed growing enterprise in today’s economy starts at 1,500 to 2,000 acres. An operation of this size is still run by a husband and wife team. They manage land and equipment assets close to $1 million in a high-risk, capital-intensive business. The return on this investment and labour is surprisingly low. There is little hope today of farm incomes even close to the average urban wage earner. In many cases farmers earn less than Mike Harris pays people on “workfare” in Toronto.

THE URBAN PERCEPTION of the farm income crisis is often skewed by media. They report that farm incomes are whatever they are that day. What they fail to understand is that the gross farm income has little to do with net income per family. Based on the last census, Statistics Canada reports that out of every $100 declared farm family income $69 is earned from off-farm jobs.

The farm income problem has its roots in the cost of producing a given commodity compared to what it will yield in terms of net profit. Many mid-size farms have commodity sales exceeding $100,000. The taxable income from these sales is often well below the poverty line.

The question many farmers are asking is: “Who is subsidizing who?”

Is it the farm woman working 12-hour shifts nursing to hold the place together? Is it the farmer working in a mine while his wife does the chores back home? Is it the trucker rolling up the miles far from home for weeks at a time while his wife teaches and with the help of their kids they keep the farm together? All in the hope that next year will be better.

Farming is as much a culture as it is an occupation and as part of the cultural mosaic it has contributed its share. That culture is changing because of hard economic times. More and more, simple economic survival at all costs is the motivation in adopting new farming practices. More sustainable farming skills are being lost. Most farmers are born into the agrarian society, picking up the fundamental farming skills particular to their region and production system from their parents. It’s from their elders and their community that young farm people learn what it takes to survive on the land. Understanding the local subtleties of land and livestock is not something you can teach people in a three-year degree course. It’s passed from one generation of economic survivors to the next. Once that chain is broken, it will be very difficult to repair.

As a people, farmers are no charity case. Most of them are highly skilled and very employable in the urban sector. They prefer living on the land and hold close a dream that includes a family and a farm. For many a farm is much more than a land base to make a living. It’s a legacy for the next generation.

Many farmers will do everything in their power to hold on to the farm but if things don’t change economically, they will have to leave the land. When that happens, the rural landscape will change in a dramatic way. In one way or another the land will be farmed. Who will farm it and how is another question. Will it be the corporations or the descendants of the pioneer families who developed the land.

It’s time to look at economic support for farm families for what it is — a social question. The question is simple. Do Canadians want the traditional family farm to survive or not?