What’s a big grain farm these days? Is it 10,000 acres? 20,000? 40,000? Those are all small potatoes compared to what’s happening in some other regions of the world.
On April 11, Agrimoney.com reported a deal whereby Kernel Holding of Ukraine increased its land base to well over 4,000 sq. kilometres. That’s slightly more than a million acres.
The acquisition involves an 80 percent interest in a farm operation managing more than 250,000 acres of leased land holdings in northeastern Ukraine. Modern equipment and 100,000 tonnes of storage capacity were part of the $186 million deal.
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Listed on the Warsaw Stock Ex-change, Kernel Holding isn’t the only big player in Ukraine. UkrLandFarming has a reported 1.3 million acres and is building three elevators with capacity of 300,000 tonnes each on top of the more than one million tonnes of storage it already owns.
Will we ever see these sorts of integrated mega farms in Western Canada?
Farms here have certainly grown dramatically. Most of the output now comes from operations with gross annual sales of more than $1 million, and an increasing number of operations generate gross sales of more than $2 million.
However, most of the large farms in Western Canada remain family based, and they’re still tiny compared to Kernel Holding and UkrLandFarming.
A few large grain and cattle operations were established in the early days of western Canadian agriculture, but they crashed and burned over time. Some significant corporate operations have emerged once again in recent years, but that isn’t the norm.
Based on history, one might conclude that moderate-sized, independent, family-based farms will continue to be the way of the future in this part of the world. However, it would be a mistake to take that for granted. Just look at what has happened to hog production in less than a generation.
Hog operations went big starting in the 1980s and accelerating in the 1990s, and many moved to a different ownership structure. Incredibly, the efficiencies of size haven’t been enough to overcome the prolonged periods of unprofitability.
Tens of thousands of farms in Western Canada had hogs in the 1970s. Today, most of the production comes from a few large players that are integrated with the major packing plants.
Some independents, including Hutterite colonies, remain in the business, but they number in the hundreds. Governments who were once committed to the continued expansion of the prairie hog industry are no longer showing much interest in the survival of independent hog producers.
You could argue that the cattle feeding industry is going in the same direction, with major packing plants owning a great deal of the feedlot capacity. However, the cow-calf business remains predominately in the hands of smaller, family based operations.
Vertical integration can be good when it is farmers investing in processing and retail. However, it’s bad when integration means big business owning or controlling primary production.
While I don’t have an appetite for government dictating how farms can be owned or how large they can grow, I hope our grain and cow-calf industries don’t see the revolution in farm size and structure that has occurred in countries such as Ukraine. Nor do we want a repeat of the revolution that has occurred within our own hog sector.
