The long-term decline in farmers is accelerating and changing in ways that transform rural communities, writes economist Al Mussell in a new paper from Agri-Food Economic Systems.
“We have a declining number of small farms, for whom agriculture is not the primary source of household income; a much smaller number of large and very large farms that are growing in number, for whom farming is the overwhelming source of household income; and a steep decline in the number of middle-sized farms- where previously, farming was the dominant source of household income”, said Mussell.
“The share of farm cash receipts has come to be dominated by the large farms.”
This has many implications ranging from municipal tax policy to the spirit of co-operation among farmers.
The large and very large farms are spending enough on inputs that they are beginning to deal with head offices, cutting out the local retailer.
That squeezes those small businesses and as they merge or disappear, the small-scale farmers are having more difficulty getting good prices and service.
As for municipal taxes, most provinces, including Ontario, provide a break on taxes on farm land, but the largest farms resemble large businesses more than a family-run operation and the rationale for a tax break is weakening.
In an earlier paper, Mussell and his team outlined how the large farms can afford to frequently replace top-notch equipment because the cost is spread over so many acres.
Their trade-ins have been a welcome source of machinery for medium-scale farmers, but there are fewer of them and demand for used machinery is declining.
That means those buying new equipment are losing trade-in values and overall farm machinery costs are rising.
In similar fashion, the largest farms are better able to afford the cost of adding more land and quota and top-notch breeding stock because they spread those costs over more units.
“In a number of respects, farmers have succeeded in working together to overcome issues of income instability, market power of processors and input suppliers, and the many practical struggles of farming,” Mussell wrote.
“Farmers can disagree among themselves on many issues but faced with an attack from the outside (e.g., activism related to animal rights, opposition to genetic technology, egregious subsidies enacted by other countries, etc.) they readily pull together to mount a spirited defence.
“The economic dominance of the very large farms serves to weaken the link, accepted implicitly in the past, between farms, rural households and families, and ownership/management of land.
“Farms with farm cash receipts ranging well over $2 million, even though almost all are likely to be family- owned, can carry the appearance or connotation of an industrial or corporate entity.
“As this occurs, some may reasonably begin to expect that farms should be regulated much more like corporate or industrial entities, and question the preference and exemptions for farms to certain regulations ranging from labour, to transportation, to tax treatment, etc., that embody the received view of farms as extensions of the household,” Mussell said.
“Farm lots were originally sized to support a farm household- commonly 100 acres in eastern Canada, and sections and quarter sections in the west. Economic farm size long ago surpassed this size and at greatly increased scale there is a desire to sever off unused farmhouses, or conversely to demolish. The juxtaposition both threatens the municipal tax base, and pressures the logic of tax rebates (at least at existing levels),” he wrote.
“New technologies that use robotics, artificial intelligence and information technology may not be so cost burdensome, but to take full advantage of these technologies throughout a farming operation will incur infrastructure and secondary adoption costs that could prove prohibitive, or conversely favour larger farms that have the supporting overhead. Some aspects of what is regarded as basic infrastructure- such as reliable internet- is still constraining is many rural areas.”
On the consumer side, the large farms have become so dominant in providing food that it’s becoming more difficult to find niche-market products, Mussell said.
And the demands of running a small-farm, niche-market farm are so great that they are being pressured out of business, he said.
However, the combination of the collapsing number of mid-size farms and growth in the already large farms will, at some point, cross a threshold in which insufficient numbers and less commonality of view will threaten the capacity to effectively resource institutions and thereby weaken agriculture as a community, he said.
Much as many small town service clubs are challenged to find volunteers, demographics will make it more difficult to find 4-H club leaders, directors willing to sit on agricultural organization executives, and association executive members prepared to deal with wedge issues among farmers fragmented across large versus small/medium fault lines.
This leads to a discussion of what needs to be done, and Mussell said “perhaps the most fundamental is the creation of awareness that the current trends in farm structure should be expected to lead to disruptive changes, and if these are to be reduced or avoided, our institutions of working together in agriculture need to be serviced and maintained, and redeployed.
“A focus on supporting the mid-sized farms- through facilitating collaboration between producers to offset size disadvantages, or to support farm products marketing efforts that are more amenable to mid- sized farms- would seem consistent with this.
“In devising mechanisms to stabilize the middle size of the distribution of farms, it will be absolutely critical to not discriminate against the large.
“Large farms have not expanded as the middle size has declined out of some nefarious intent; it is the outcome of free-enterprise and competition and the leveraging of economies of size that creates our highly efficient agricultural system.
“The large farms are best positioned to adopt the latest technology, account for the preponderance of farm cash receipts, and anchor food supply chains- discriminating against them would be highly counterproductive.
“Anticipating the difficulties and addressing options for government policy and new roles for grassroots agricultural organizations will be nuanced and require extensive dialogue. This needs to occur.
“This situation, understood properly, behooves the industry and governments to engage in a renewal of institution building that can help to address the trend of stratification of farms, bridge the gaps, and preserve the diverse community agriculture has created for itself, and in so doing address the related issues requiring collective action,” he said.
