Editorial: The ‘Bonanza’ farm

Serious thought needed about who will do the work, how will they be paid, and where the investment capital will come from

farmer loading grain truck with auger

I’ve seen a man on one of our big farms start out in the spring and plow a straight furrow until fall. Then he turned around and harvested back.”

This anecdote dating back to the late 1800s was shared by Sam Moore in the 2010 article “Bonanza Farms of the Red River Valley,” found on the website farmcollector.com.

It was actually a tall tale. But it captures the sense of awe people in those times had of a rather remarkable phenomenon in the farming history of the Northern Great Plains.

There were about 90 farms ranging in size from 3,000 to 100,000 acres that qualified as Bonanza farms in operation during the late 1800s, according to Hiram Drache, writing for the North Dakota Institute for Regional Studies.

Many of them did quite well, at least initially. But within a generation, most of them failed and were carved up into smaller parcels. The hired management was able to leverage their scale for input purchases and marketing, but when things didn’t go according to plan — as is the norm in farming — they were unable to weather the downturns.

One of their biggest weaknesses was their inability to find labour — up to 1,000 men per farm plus the women to cook for them. These operations became largely dependent on unskilled migrant workers from Mexico, and became too costly and too unwieldy to manage.

Owner-operators on neighbouring homesteads proved better able to function through the good and bad times.

This history came to mind while reading through the financial documents filed to support a modern-day Bonanza farm’s court application for creditor protection.

One of Western Canada’s biggest farm outfits, Broadacre Agriculture, and its wholly owned subsidiary Wigmore Farms Ltd., were granted that creditor protection Nov. 4.

“The financial prospects of the company are bleak. It was already in a precarious position at the beginning of 2014 and it has continued in a downward spiral,” the company’s chief financial officer Andrew Marshall says in an affidavit filed with the court.

“The unfortunate reality is the company has never been profitable,” the affidavit later states.

Headquartered in Calgary, this farming enterprise formed in 2010 was cropping 65,000 owned and leased acres of Saskatchewan farmland. It currently owes around $46 million to financial institutions, suppliers and investors.

The company’s plans “to become the pre-eminent farm operator in Canada,” were dashed in the four short years since its inception by a series of disappointing crops and its overly ambitious expansion.

Even though the company wasn’t making money, it borrowed more in 2012 — some of it from private investors at 20 per cent interest — to buy out Wigmore Farms Ltd. — another Saskatchewan mega-farm that was in financial trouble. Along with the extra farmland and extra debt came some unexpected baggage, a bill this fall from the federal government seeking repayment of just over $477,700 it says was overpaid to Wigmore Farms in 2005 and 2006.

It’s unclear whether this outfit had trouble finding the 60 workers it needed during the growing season, but the financial statements do tell us that labour expenses at $3.17 million in 2014 and $3.58 million in 2013 were second only to crop inputs as the company’s biggest operating expense.

Back in the days when kids provided much of the labour on the farm, they could be bought for food and pocket change. These days, as farmers grow increasingly dependent on hired hands, they are competing with the oilpatch and trucking companies for employees.

Recent surveys initiated by the Canadian Agricultural Human Resource Council are designed to help quantify the extent of the labour deficit, but it is widely acknowledged that a critical one exists throughout the sector.

The labour issue wasn’t even on the hog industry’s radar when that sector began its rapid transition from owner-operators to consolidated ownership dependent on investment capital and hired help. The investors were happy to be involved when business was booming, but they quickly fled when times got tough.

So, although it’s generally accepted that grain farm sizes will continue to grow, and that export opportunities will continue to expand, some serious thought is needed about the finer details — such as who is going to do the work, how they will be paid, and whether there are stable sources of investment capital needed to operate.

We don’t profess to know what the optimum scale is for Prairie agriculture. If Broadacre had harvested the crops it anticipated over those four years, it might have achieved its goals. But it didn’t, and its investors quickly lost faith and began closing in.

We’re left to wonder whether this is simply history repeating itself — or whether someone, someday will come up with a mega-model that actually works.

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]



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