WILL VERBOVEN - Ahead of the Heard
Results from the 2011 national agriculture census have been released and they show a confusing picture as to the status of who are farmers in Canada.
The census reports that there are 205,000 farmers in Canada. Out of a population of 34 million that’s just .006 per cent. That low figure actually gets worse if you refine the definition of what constitutes a real full-time farmer.
Statistics Canada hasn’t updated that definition for many decades, which means that farms with less than $10,000 in receipts are also counted. According to the official figures, that’s 20 per cent of the total figure. If you expand that to under $25,000, it’s 37 per cent of all farms.
With all due respect to those folks, they can be classified as hobby farms or part-time operations.
The real meat in the census data are those farms that gross more than $500,000, but they constitute only 11.5 per cent of the total number of farmers — that would mean there are only 23,575 significant commercial farmers in Canada.
It gets even more interesting that there are only 9,600 farms that gross more than $1 million, but that small number produces a whopping 49 per cent of gross farm receipts. None of this comes as a surprise, as the consolidation trend in agriculture has been ongoing for the last 50 years.
It does cause one to ponder at what point does consolidation slow down or stop. So far, there is no indication that it will. For instance, at one time it was thought that a 2,000-acre grain operation was a viable full-time grain operation. Now a commercial operation is deemed to be at least 5,000 acres, if not more.
The same goes for cow/calf operations. You are no longer considered serious unless you have at least a 600-head cow herd as a bare minimum, and even then you had better not have any mortgage in order to survive.
It would seem that there is still plenty of room for consolidation and expansion, particularly in cereal and oilseed operations.
Advances in technology and agronomics continue to push the limits of how many acres a single person can farm.
Much can be read into the farm census data and it could have political and economic consequences, depending on how they are interpreted by governments and the industry.
For instance, farm support programs and industry development programs carried out by governments would probably base their rationales on the 205,000 figure.
But is it realistic spending billions of taxpayer dollars on supporting farmers that are deemed to be small-time operators. Is there any real likelihood that many of those folks will ever evolve into large operators with a half million in receipts.
Again, with all due respect to those hardworking operators, it’s not likely for a number of good reasons.
Another question is — will sending big support cheques to operators that gross more than a million dollars have any impact on the economics of those operations.
Sure, any cheque is welcome, but some lessons from the American experience in that regard are worth noting. In the U.S., when limits were put on how much large commercial farming operations could receive in government subsidies, it was found that virtually all of them continued to operate quite successfully when those subsidies were reduced.
One of the reasons for that is that, in many cases, large operators have much easier access to hedging their costs and returns, and of course had economies of scale. Also, their bankers insisted that they be viable without any long-term dependence on subsidies.
In that situation, any ongoing support programs were usually a lucrative bonus to the operation, rather than critical support. One can understand why governments would be inclined to reconsider their support programs in such situations.
But there is still some political capital left in the overall agriculture industry and governments are more likely to continue their subsidy and development programs, claiming they support not just 205,000 farmers, but additional hundreds of thousands of farm family members and farm workers.
But one can’t help but note that considering the few actual full-time commercial farmers, those government programs could be seen by urban voters as just large rural social programs for most farmers.
That would not be a positive development for agriculture.
Will Verboven is the editor of Alberta Farmer.