Monday, September 13, 2021

Large farms gobbling up assets

Canada’s large farms are growing fast and are upsetting long-standing ideas about the evolution of agriculture, according to a new report from Agri-Food Economic Systems.

Instead of the popular idea that all farms gradually increase in size, Statistics Canada data reveals that the large farms are gobbling up small and medium-sized farms.

This has implications for farm policy, write Douglas Hedley and Al Mussel of Agri-Food Economic Systems.

But it’s not clear what those policies ought to be, they said, because curbing the large farms would hurt Canada’s global competitiveness, yet failing to help small farmers threatens the viability of rural communities.

If nothing is done, they said the large farms face a tougher future because they have been depending on the strong demand from small farmers for used machinery to enable them to continue trading up to the newest and biggest farm machinery to continue expanding and becoming more efficient.

In a summary of the trends, they write that “today, increasing average farm size is not due to farms incrementally increasing in size step-by step- it is almost entirely explained by the increase in size of already large and very large farms and the decline in medium-sized and small farms.

 “A step-by-step process leading to larger farms may never have accurately reflected these dynamics, but the largest farms impact overall demand and prices because their “investments in new equipment increase farm product supplies, dampen farm prices, and sharpen the competition for land from large farms- continually pressuring the viability of small and medium-sized farms.”

And so a conundrum exists.”

Large and highly efficient farms are a lynchpin in competitive agri-food supply chains; smaller farms are linked to the development and sustainability of rural communities,” they write.  

“Policy objectives for farm structure do not exist, let alone programming. By default, policy-related discussions on farm structure gravitate to extremes- encourage the largest and most efficient; or, conversely protect/restore the small farms.

“The linkage between the two extremes, or the more general dependence within distribution of farm sizes observed here, is never raised,” they said.