It’s a tale of two kinds of farms in Canada, without much in between.
The well-established trend to fewer farms will continue in the coming years as smaller operations focus on supplying local markets and the larger ones concentrate on export sales, says Ron Bonnett, president of the Canadian Federation of Agriculture.
Small farms will be operating in a niche role in meeting a growing demand for locally grown foods while the larger operations will be driven by lowering their cost of production to remain internationally competitive, he told a recent Canadian Agri-Food Policy Institute conference.
The result is that farmers will have to decide whether to become larger or locally focused, he said. “People will have to make a decision on which way they’re going.”
With that trend will come a shift in how farmers view markets, he said.
“Now we have a lot of product grown with the expectation that someone will buy it,” he said.
In the future, producers will have “to be more directed to the retail market and able to meet sustainability goals and food safety requirements.”
Whether farms are large or small, they will need to become technologically sophisticated, which will create job opportunities that could only add to the labour shortages facing agriculture, he said. While he doubts technology will replace all manual labour on farms, “we’ll need innovations or we won’t hit the $75-billion agri-food export goal.”
Agriculture economist Douglas Hedley says that Statistics Canada doesn’t define what a farmer is and Business Risk Management (BRM) programs are not well geared to the needs of small farms.
At this year’s Canadian Agriculture Economics Society conference, Hedley asked during a panel discussion on BRM programming about what was being done to accommodate the growing number of small and commercially viable farms. His main point was that the BRM programs have a “one-size-fits-all approach” that was oblivious to the growing split into small and large farms. No one on the panel had an answer, even with the review of BRM programs underway as part of the introduction of the Canadian Agriculture Partnership in March.
When CAPI held its workshops across the country on the steps needed to fully implement the Barton report, it found a lot of interest in ensuring government farm programs accommodated larger and small operations. That’s expected to be included in a report on its consultations due out in mid-June.
There are still a lot of farms across Canada that depend on off-farm income to supplement earnings from sales of farm products, Hedley said in an interview.
While he thinks they should be fully covered under BRM programs, the government attitude seems to be ‘they have off-farm income so why should we worry about them.’
Hedley pointed to research done by Alfons Weersink of the University of Guelph’s department of food, agriculture and resources economics on the changes in farm sector. In an article published last December in the Canadian Journal of Agriculture Economics, Weersink concluded Canada is transitioning from a farm sector “that was very homogeneous to one with significant differences in size and/or orientation. The decline in the number of ‘average-size’ farms and the growth in the number of large farms are due primarily to technological innovations that push operations producing commodities to grow as a means of capturing economies of size.
“The increase in the relative number of small farms is also due partially to technical advances that allow for the production of food goods with the desired quality attributes to be delivered to the appropriate market,” he said. “This market is continually being differentiated due to demographic and income shifts. The growing heterogeneity in farm structure complicates the assessment and design of farm policy.”
When the farm sector was homogeneous, it could be encouraged through support and extension programs, he said. “The policy objective has shifted toward improving the competitiveness of the sector, but for which of its components? The trend toward greater heterogeneity is likely to continue.”
Weersink’s analysis found that 30.7 per cent of farms had sales of more than $2 million in 2016 compared to 5.9 per cent in 1981. The largest sales category was between $100,000 and $250,000 which nearly one-third of the farms achieved in 2016. Just over 20 per cent of farms had sales between $500,000 and $1 million and just over 22 per cent had sales between $1 million and $2 million.
However, the largest number of farms were between 10 and 69 acres.
In 1981, “the bulk of the census farms were in the 240–399 acres category and the distribution was approximately normal.” About half the farms sold less than $25,000 and around five per cent sold more than $250,000.” By 2016, the average size nationally was 820 acres.