Editorial: Farmers should tread carefully when seeking more aid

There is one stabilizing force for agriculture amidst all the uncertainties as the effects of pandemic management ripple through the food chain like an electrical shock to everything it touches.

The recently released Farm Credit Canada report on land values, based on 2019 transactions, shows the value of farmland in Canada continues to rise, albeit at a slower pace than in the past.

What the FCC characterizes as “modest” growth of 5.2 per cent nationally — higher in some provinces, lower in others — would make most Canadian investors ecstatic in today’s climate.

Related Articles

Many have seen their investment portfolios and retirement nest eggs shed 20 or 30 per cent of their value in just a few weeks.

Granted, these are historical numbers. FCC’s chief economist J.P. Gervais says it’s possible they’ll decline in the future, but adds that there is no indication, even with the COVID-19 crisis, that they will.

Land values have continued to appreciate for 27 years in Manitoba, and at a pace that is out of step with farm incomes since about 2015. It’s evidence that besides its productive value, land is increasingly seen simply as a secure investment.

For farmers, this is a double-edged sword. They don’t capture the value of that asset appreciation until they sell it, so for many it’s their retirement plan.

In the meantime, it is a stabilizing force in the farm economy.

The cost of growing a crop is such that few can do it these days without borrowing money every year to operate. Landownership is the foundation of their equity position with their creditor and inherently tied to their liquidity.

So even though farm incomes have suffered in recent years, most recently due to last autumn’s ‘harvest from hell’ on top of ongoing trade disruptions affecting export sales, farmers are more able to access the credit they need to plant a crop because of equity in their land.

However, acquiring farmland has never been more expensive for young or beginning farmers; even renting land is becoming cost prohibitive based on its ability to generate revenue. This is a problem for an industry on the cusp of perhaps the largest intergenerational transfer in Canadian history as the average age of farmers moves closer to senior citizen with each census.

It also creates an issue of optics as farmers reach out, as they did this week, with an appeal to governments and Canadians in general for additional support through the COVID-19 crisis.

Make no mistake. The issues raised by the Canadian Federation of Agriculture and other farm organizations, including Manitoba’s Keystone Agricultural Producers, are real concerns.

As I have noted in an earlier column, Canadians have for the first time since the last world war experienced limited supplies of foods they would normally take for granted. Most of these shortages are related to pinch points in the supply chain caused by sudden shifts in demand and processors that have run into issues with the virus affecting their workforce.

In the livestock sector, this creates a scenario in which farmers may have to dispose of livestock ready for market because there is no place to send it. At the very least it means producers have to keep animals on feed for longer.

There are no reports of this happening yet in Canada, but poultry operations in the U.S. have had to euthanize healthy birds.

Clearly this is an example where the effect of this pandemic can be felt directly on the farm.

Farmers who produce fruits and vegetables, both domestically and elsewhere, are having a hard time getting the workers they need to grow these labour-intensive crops.

They’re largely planted, tended and harvested by temporary foreign workers, who are suddenly in short supply as the pandemic has thrown international travel into chaos.

Although there are major logistical hurdles to overcome, it would be a fantastic life-altering experience for Canadian university students to have a summer job in the fresh air and sunshine that connects them in a very tangible way to their food supply.

But as real as these issues are for farmers, as they are for all of Canada trying to ensure its food supply is secure, the industry needs to be sensitive to the realities facing households across the nation.

With more than one million Canadians out of work, families at risk of losing their homes and retirement savings decimated by the pandemic fallout, farmers must tread lightly and carefully in presenting their case for more aid.

About the author

Vice-President of Content

Laura Rance

Laura Rance is vice-president of content for Glacier FarmMedia. She can be reached at [email protected]

Comments

explore

Stories from our other publications