Canada’s farm support system should be revamped to recognize that more than half of farms are too small to be viable, says a new critique of the programs.
Researcher Al Mussell of the Guelph, Ont.-based George Morris Centre argues that business risk management payments to small farmers distorts the perception of the health of the industry and the need for government support.
In a new study, he suggests the programs be re-organized into two – a program for the “commercial farm segment” based on payments to farmers trying to make a living from the land when there are losses, and a separate program for smaller farmers with gross revenues too small to make the farm a viable family-supporting business.
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Support for smaller farmers would be based on their contribution to the environment.
Mussell conceded that his proposal will be controversial among those who argue that smaller farms can be as productive and efficient as larger farms and “industrial agriculture” is not the way to go, but he said the fact that most farms have gross revenues of less than $100,000 and survive only because of off-farm income and program payments distorts analysis of the effectiveness of programs.
Meanwhile, there is pressure to increase BRM funding.
Mussell noted that over the past two decades, program payments have tripled but aggregate net farm income has stayed flat.
“This suggests that BRM programming is not working very well if its purpose is to support or stabilize farm incomes,” he wrote. “On the other hand, even with this heavy public expenditure on program payments, the farm community appears broadly dissatisfied and is requesting more funding and more emphasis on BRM to improve the farm income situation.”
Mussell argued that the view of agriculture as a constantly money-losing business in need of government support is both distorted and harmful.
“Farm structure suggests that in the main, rather than being a sectoral trend, chronic low profitability in agriculture is an issue of small farms that are not of sufficient economic scale to provide a household income for a family,” he said.
“The data suggest that the majority of farms are struggling economically but on further analysis, most farms are not of an economic scale that would lead one to expect otherwise.”
Mussell said that the image of agriculture as chronically needy is bad for the industry.
“There must be a certain negative psychological effect from the constant claim of widespread losses in primary agriculture in terms of broader interest and excitement toward agriculture and investment in the sector,” he wrote.
“If the claims were accurate, one would expect to see a countryside riddled with farmland falling into disuse as farmers fail financially, but this has not happened.”
Mussell noted that according to Statistics Canada, 100,000 Canadian farms – 56 percent of the total – reported gross revenues of less than $100,000 in 2006. Program payments covered virtually all farm operating income.
Farmers with gross receipts between $500,000 and $1 million were proportionately the least dependent on program payments.
Mussell argued there is logic to governments supporting smaller farmers for the environmental benefits they bring but it should be through a different program and not based on the financial results of their farm operation.
And since governments are facing fiscal and deficit challenges, any decision to increase BRM spending largely to support income challenges on smaller farms would come at the expense of other agricultural spending, he argued.
“In an era of structural deficits, presumably increasing BRM funding will come at the sacrifice of something else – inspection, extension, management training, environmental compliance assistance, research (or) marketing assistance.”
