The National Farmer’s Union has released a new report that challenges the notion that the Canadian farm income crisis is the fault of “inefficiencies” of production among small Canadian farmers.
Called The Farm Crisis, Big Farms, and the Myths of Competition and Efficiency, the NFU report cites a 2001 Statistics Canada study. It found that between 1961 and 1996, the increases in multi-factor productivity in agriculture – the increase in output relative to the increase in a bundle of inputs including labour and capital – were bigger than the gains made in any other industry.
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In other words, small farms were, and according to the NFU continue to be, the most efficient business operations in Canada.
Backed by the Statistics Canada data, the NFU report states: “Since the early 1960s, farmers have increased their efficiency at a rate unmatched by other sectors, and at a rate almost triple that of the Canadian business sector as a whole,” averaging a 3.4 percent increase per year versus an average for all industry of 1.2 percent per year.
NFU executive secretary Darrin Qualman believes the term “inefficiency” distorts what’s really driving the farm income crisis in Canada.
“It’s one of the lies we tell about farmers,” he said. “Inefficient compared to what?
“It’s just this really simplistic assumption about how the economy works – that it rewards the efficient, and the productive and the industrious; (yet) you see farmers being pushed out in record numbers. Within (the last) five years, we’ve lost 11 percent.
“If (this assumption) is true, then those who it’s not rewarding, who it’s pushing off the land and smashing, must by definition be the ‘unproductive’ and ‘inefficient.’
“If you believe something else (other than this assumption), then you have to ask difficult questions, like what’s going wrong in this market that it would bankrupt and expel extraordinarily efficient family farmers?” Qualman said.
“Who’s taking the profits out of the system?”
The NFU study showed that while Canadian gross farm revenue has increased from $17 billion in the mid-1900s to more than $35 billion today, realized net income has fallen as a result of higher input costs.
“Over the past 50 years, for every dollar new technologies and inputs have contributed to farmers’ revenues, farmers have been made to pay $1.44,” the report said.
The NFU’s biggest “pricing predators” are fertilizer manufacturers. The cost of nitrogen is also a significant input cost to farmers, and one of the reasons that net incomes continue to fall while gross revenues rise, the NFU said.
Leading fertilizer companies like Agrium and Potash Corp. of Saskatchewan set prices based on grain prices, the organization added.
“This is the fertilizer companies saying, ‘we don’t set our prices according to supply and demand,’ this is them saying, ‘if they have more, we charge more,’ ” Qualman said.
“There’s just no way you can do that in a competitive economy.”
The NFU’s national convention is Nov. 20-22 in Saskatoon.
