PEEBLES, Sask. – Cecilia Olver displays a shred of optimism as she drives around the fields of the 3,200-acre farm she works with husband Brian.
“We’re OK this year,” she says, reflecting on the good yields and decent prices for peas and lentils this fall. “I feel pretty optimistic this year. We were blessed with a good crop.”
Despite Olver’s positive appraisal of this year’s harvest, optimism is a rare commodity on many prairie grain farms.
Across the West, farmers that depend heavily on grain and oilseed production are facing tough economic times.
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The Olver farm is no exception. This year, peas and lentils will carry the day. Grains and oilseeds will not. Over the past few years, the Olvers have tried to diversify their operation. They’ve moved away from grain production and focused more on oilseeds, lentils and sunflowers.
They have moved to zero-till production, purchased a tractor-trailer unit to haul their own grain and improved their marketing skills. They even considered investing in a hog operation with members of an informal, local marketing club.
Still, the last few years have been a story of diminishing returns.
The couple recently cut production from 5,000 acres to 3,200 and has even considered getting out of agriculture entirely.
“It’s too bad,” says Olver.
“My daughter is getting married and she really wants to farm. In 1995, I would have said, ‘ come home.’ Now, I’m telling her not to. We will not stay until we have nothing left.”
A few hours east, near Rapid City, Man., Jack and Debbie Kooting are also struggling.
The Kootings, who have been farming for the past 25 years, grow grain, oilseeds and peas on 1,700 acres. They are also building a pig barn.
“I’m not sure what we’re going to do – if we’ll make it or not,” says Debbie during a kitchen table chat with neighbours.
Less than an hour east of the Kooting farm, near Neepawa, hog and grain farmer Weldon Newton is doing all right this year because hog prices are strong. But he also agrees that governments need to do more to support farmers.
“I agree just throwing money at it doesn’t solve the problem,” Newton says.
“But we are in a position where we do need help until other governments cut back on their subsidies. You don’t have to look too hard to see that a huge part of our farm industry is in trouble.”
By federal government standards, Newton, the Kootings and the Olvers are considered large farmers.
They operate farms of 1,500 acres or more. Their gross revenues exceed $200,000 per year. They have investments worth more than $1 million and they are looking for ways to diversify their farm incomes.
Nonetheless, they are all operating in the red or close to it.
At the University of Saskatchewan, agricultural economist Richard Gray is not surprised. Last year, Gray helped conduct a study of 11 grain farms in Saskatchewan, the smallest of which was the Olvers’.
All the farms studied are making less than they think their investment justifies and some are struggling to make ends meet.
Most farms are reducing their acreage. All are discouraging their children from following in their footsteps.
This is a group that argues that increased government subsidy support is the only way to keep a major economic sector from bleeding to death.
“There is no optimism there,” said Gray. “I see the bottom just falling out of the asset base,” added Hartley Furtan, Gray’s colleague at the university.
In the offices of federal bureaucrats and financial lenders who service the prairie farm sector, this anecdotal evidence is not an accurate reflection of agriculture’s overall strength.
Stories from the Prairies paint a frustratingly negative picture of an industry that bankers and bureaucrats see as healthy, progressive, efficient and expanding.
Last summer, as they prepared for the federal-provincial agriculture ministers’ meeting in Whitehorse, federal bureaucrats prepared a presentation entitled: Understanding the agri-food sector … a success story to grow on.
The presentation set out an optimistic scenario.
“The agri-food system is a complex $130 billion integrated chain, providing one in seven jobs,” the presentation said.
“It is a major sector of the economy and has kept pace. Indeed, all the components of the agri-food system are growing.”
Federal government statistics show that farm incomes are increasing, agriculture is a healthy sector, farm debt arrears are the lowest in years and farmers who have expanded or diversified are more likely to be financially stable.
Federal assistant deputy agriculture minister Doug Hedley produces statistics that show the weakest link in the ag sector is the one-third of farmers who gross between $10,000 and $100,000 and cannot make a living.
“They are the people we hear from most.”
Below that, there are hobby farmers who do not depend on farming for a living.
Above that, farmers have the resources and skills to adapt and earn a living.
“It is an issue of size and resources rather than (commodity) price,” says Hedley.
While federal statistics show some farms in all sectors losing money, they also show realized net farm income across the country up by more than $3 billion last year.
Saskatchewan and Alberta were down, but even there, many farmers did well.
In Winnipeg, Barry Smith, the Canadian Imperial Bank of Commerce agriculture manager for Saskatchewan and Manitoba, believes the federal numbers.
He sees a generally healthy industry with some trouble spots, even though many farmers do not want to believe the overall positive news.
“I was involved in debt review boards in the 1980s and the situation today isn’t even close,” he says.
In Regina, Farm Credit Canada chief operating officer Janet Wightman argues that it is an issue of management skills rather than farm size or grain prices.
“We’re not seeing anything to support subsidies as the answer, perhaps the reverse,” Wightman says. “The answer is business planning.”
But across the West, farmers are telling a different story.
Newton, the Olvers and the Kootings, for example, are doing everything that bureaucrats and bankers say financially viable farmers should do.
Their land bases are relatively large, their gross income levels are above the $100,000 threshold and their management attitudes are progressive.
Yet, their Net Income Stabilization Account funds are nearly gone. They have little capital to invest in livestock diversification and they say economies of scale begin to backfire when a farm expands to 4,000 or 5,000 acres and a family can no longer do the work.
Why is there such a disconnect between the official statistics, lenders and farmers?
One Prairie banker says many farmers are doing well. They just don’t want to admit it.
“Having a good year on the farm is a state secret because your neighbours don’t want to hear it,” said the banker, who asked that his name be withheld.
Another common theory is that governments and economists recognize that tens of thousands of prairie farmers will be pushed out of the industry as Canadian agriculture undergoes a major transition.
This will happen as Canada moves toward a farm economy that is dominated by two types of operations: extremely large, intensive farms and small hobby farms whose operators have full-time, off-farm employment.
Government refusal to increase farm subsidies will speed this transition, forcing small and medium-sized farmers to leave the industry or compete by getting bigger.
Consistent with this theory are widespread predictions of farm depopulation over the next few years.
Milton Boyd, an agricultural economist at the University of Manitoba, has gone public with his plan to get the perpetually poor farmer off the land.
He published a proposal that suggests Ottawa offer a one-time, $3 billion buyout to grain farmers. It would allow many vulnerable farmers to leave the land while ending the taxpayer obligation to fund future subsidies.
“A transition program would end a delusion that has enticed thousands of Canadian grain farmers to struggle for years against insuperable odds,” Boyd wrote.
“It would give them hope that they could break off their losing battle against the treasuries of Europe and the United States without facing personal disaster.”
Other academics and bureaucrats speculate privately about the depopulation of this “middle group” of medium-sized grain farmers as an inevitable outcome of the current income squeeze.
Many are reluctant to speculate publicly, fearing political fallout from their comments.
Meanwhile, federal and provincial governments are working to include a “transition” fund in any new long-term farm policy. Details of the transition fund have yet to be determined.
“I think you will see these low incomes and low prices drive many people off the land at some considerable damage to the rural Prairies,” said Furtan.
“If I had to choose, I’d continue subsidies. It would slow the process down.”
