Just because today’s farms are bigger, that doesn’t mean they’re better – at least when it comes to making money.
The National Farmers Union used information from the Statistics Canada 1996 census to highlight that although producers farm more acres now, they aren’t much better off than their fathers and grandfathers.
The NFU figures show that in 1941, the average Canadian farm was 237 acres, had an average capital investment of $60,123, in 1996 dollars, and a realized net income of $7,139. The Consumer Price Index for inflation was used to convert 1941 dollars into 1996 dollars.
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By 1996, average farm size had almost tripled to 606 acres, average capital investment had exploded almost 10 fold to $565,793, but realized net income was nearly unchanged at $7,174.
“It’s unlikely that farmers’ efficiency or inability to adapt is the problem,” said Darren Qualman, executive secretary for the NFU.
Qualman cited the agricultural chain, which includes railways and elevators, as part of reason net income hasn’t increased.
“All the players in that chain are large and powerful and can make sure they make 10 to 15 percent equity,” he said.
Increase in inputs
Bill Brown, professor of agricultural economics at the University of Saskatchewan, said corporations play a role in stagnant farm returns in that farmers now buy more off-farm inputs than they did in the 1940s.
“Most farmers (in the 1940s) were still using summerfallow acreage to combat weeds,” he said.
But commodity prices have more to do with the sluggishness of net farm income, he said.
“If you look at the long-term trends of prices and yields, crop yields have increased over time, but real prices for the commodities are dropping.
“A farm has to be twice as large or three times as large, almost, to generate the same amount of income,” he said. “The farmer has to get larger to generate enough income to survive.”
Brown said he doesn’t see an end to the trend. “If the last 50 years are any indication, it would seem to be that more and more farmers would have to get larger.”
Some farmers are getting out of the cash squeeze another way.
“What many farmers in Saskatchewan have done in the last 10 years is acquire off-farm income. Rather than getting larger, they’re getting part-time jobs,” Brown said.
For those not looking for a second job, the NFU’s Qualman said the solution is getting involved. “Farmers need to join together to get some market power for themselves.”
