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The census mystery on Canadian farms

29,000 mid-career farms have disappeared in just five years. What happened?

For the most part, the 2016 Census of Agriculture was as unsurprising as most farmers might have expected. We already knew that farms are getting larger, and that farmers are getting older.

But the census did reveal something striking — a shocking reduction in the number of mid-career farmers between the ages of 35 and 54.

For some reason(s), Canada lost more than 29,000 of those farmers between 2011 and 2016, a decrease of nearly 23 per cent across the country.

It seems to make no sense. At a time when farm income was smashing every record in the book, a quarter of our mid-career farmers left the industry.

“What’s going on?” asks Glen Snyder, agri-business manager for the Bank of Montreal in southern Saskatchewan. “It was very widely presented in media that a lot of young farmers were coming home… and then we see these stats.”

Was it just because those farmers got older? That’s the usual first guess. In other words, did a big chunk of those mid-career farmers reach their 55th birthdays, so they’re still farming, but now they’re in the 55-plus category?

Apparently not.

While some farmers did turn 55 since the last census, they account for fewer than 6,500 farmers, so they don’t even coming close to account for the demographic bleed.

photo: Table courtesy of Statistics Canada

So maybe it’s because demographics are having another impact on this age group, points out Rob Gamble, chief economist with the Grain Farmers of Ontario. The census found a four per cent decline in the 35- to 54-year-old age category for the Canadian population as a whole, he notes, with an 11 per cent drop for the country’s overall 45- to 49-year-old age group.

But still this isn’t enough to explain the farm trend.

The answer must lie somewhere else.

Sell when the selling is good

The place to look may be cattle. When beef prices recovered a couple of years ago, it was a bit of a double-edged sword for the industry, says Brian Lemon, manager of Manitoba Beef Producers. Many producers actually exited the industry, he says, seeing it as their chance to get out without selling at a complete loss.

It isn’t just Manitoba beef producers who saw peak prices as a chance to cash in their assets. Morwenna Sutter, a real estate agent in northeastern Saskatchewan, says it was also “pretty common” to see beef producers there sell their operations and move on when prices rose.

Sutter grew up on a mixed farm in Alberta, and worked in animal pharmaceuticals, and then the seed business, before moving into ag real estate. She and her husband also run a grain farm. They are in that 35- to 54-year-old demographic of farmers that dipped in the last ag census.

Asked whether those census numbers match what she’s seeing on the ground, Sutter says yes and no.

Morwenna Sutter.
photo: Supplied

“We are seeing farmers looking to exit the industry,” says Sutter, although the numbers of producers selling has slowed in the last two years, she adds.

Sutter says she’s also seen some grain farmers in the 35-to-54 demographic selling their farms if they don’t have children taking over. They may see their financial risk growing if they continue farming, and ask themselves whether they want to continue farming for the next 30 years without successors.

For farmers with equity and no successors, it’s been a good time to cash out. “In the last five years our market has doubled, if not tripled in areas, for land values,” says Sutter.

These days, farmers are always calculating the risk and reward when they’re making financial decisions, she adds. “We’re not farmers anymore. We’re ag businessmen.”

Factor in the stress and risk of farming — Sutter describes it as “an all-in poker game every year” — plus the realization that there’s more to life than farming, and it can make sense that some producers opt to exit early, so they can spend more time with family or focus on other goals.

It’s not just western Canadian farmers that have seen rising land values. Gamble says land values have increased in his province over the last five years as well. He suspects that it’s very attractive for farmers in that 35-to-54 age group to sell, especially once they enter their 50s.

Although Ontario has several larger, commercial grain farms, the province has a good number of small or part-time farmers, Gamble adds. The next generation is less likely to come back to a 100-acre grain farm, he points out. And like Sutter, he thinks farmers without a successor are more likely to exit the operation.

Still, selling their operations isn’t an easy decision for producers, and it might take three years from when a producer first approaches her to the sale, Sutter says. “It’s hard for anybody because you put so much sweat into it.”

Glen Snyder, ag manager for BMO in Regina, is a veteran in agricultural banking, having worked in the industry since the 1980s. He has done over 800 land valuations so far this year, and he expects to exceed 1,200 by year’s end. From what he’s seen, land values in about 50 per cent of Saskatchewan’s rural municipalities are still increasing slightly. Snyder says that big operators will still pay a premium for land at times.

However, in some parts of Saskatchewan, land values are flattening or decreasing. Snyder estimates that about 20 to 25 per cent of Saskatchewan rural municipalities have seen land values that dropped by five to 10 per cent. Another 30 per cent of municipalities have seen values flatten.

“We saw land values starting to slide after the floods in certain areas,” says Snyder, such as parts of east-central Saskatchewan.

Sutter says demand for good-quality grainland is as high as ever, but not for marginal grainland. “And that just comes down to productivity of the land.”

Snyder sees more pressure on margins in the near future, but these tighter margins will take time to affect land values, he believes. One of his younger farm clients observed that flattening or dropping land values would ease expansion, a sentiment likely echoed by young farmers across much of Canada.

Consolidation and incorporation

Despite rising land values during the last census period, the grain industry hasn’t seen an exodus of producers the way the beef industry did. In fact, there were nearly 2,000 more farms producing grains and oilseeds in 2016 versus 2011.

Snyder says he’s seen family farms that have sons and daughters coming home incorporating to ease succession planning. He estimates that up to 60 per cent of Saskatchewan farms with successors coming home incorporated in the census period. Profitable margins between 2011 and 2016 also spurred farms to incorporate for tax reasons, he adds.

Sutter has also noticed producers incorporating. Along with smoothing succession planning, incorporation offers a tax advantage for buying land, she says, and revenue earned from that land is taxed at a lower rate if the farm is incorporated.

The latest ag census numbers confirm those observations. The number of family corporations rose to 43,457 in 2016, an increase of over 21 per cent.

photo: Table courtesy of Statistics Canada

The lion’s share of Canadian farms are still sole proprietorships — just over 100,000 as of 2016. But the sole proprietorship category has seen a dip of nearly 14,000 farms since 2011.

Unsurprisingly, too, the latest census notes farm size is still growing, while the number of farms is decreasing in Canada. Canada-wide, farm size averaged 820 acres in 2016, up from 779 acres in 2011.

Saskatchewan farms averaged 1,784 acres, making them the largest in the country. Snyder has certainly seen his share of consolidation in Saskatchewan. Interestingly, there was a “huge surge” in Hutterite colony expansion in Saskatchewan, and Western Canada, he says, in the last census period.

“I know my Hutterite telephone book hasn’t quite doubled, but it’s getting close to that,” he chuckles.

The ag census captures a maximum of three operators per farm, including for Hutterite colonies. That, a call to Stats Canada confirms, has been the practice since 1991.

The limit on the number of farm operators doesn’t just affect reporting of Hutterite colonies. Gamble points out large farms could have four or five operators.

“It could be siblings working together with the previous two generations. So there might still be some under-reporting there.”

Even in the beef industry, some of the attrition can be explained by consolidation, Brian Lemon says. As a volume-based business with tight margins, one way for a beef producer to remain profitable is to increase volume.

“From strictly an industry perspective, having strong, large farms is not a bad thing. But we do recognize what that does to rural communities,” says Lemon.

Weather, weather, weather

Lemon thinks he can see additional reasons for the loss of mid-career farms. Lemon took up his post at the Manitoba Beef Producers in the spring of 2016, but before that worked with the Canadian Food Inspection Agency, AAFC, and Canadian Grain Commission.

The hollowing out of the middle-age demographic, he says, confirmed what he’d suspected for a long time. Too many pressures have intensified at the same time.

Manitoba beef producers suffered through “a bit of a perfect storm in the sense that BSE hit, the markets tanked, there was no money in cattle. And then we, in Manitoba, hit a wet cycle.”

Brian Lemon.
photo: Supplied

“Manitoba is very good at dealing with floods typically, if you wanted to paint with a broad stroke,” says Lemon, who is based in Winnipeg. The Red River usually breaches its banks in the spring, floods cropland, and retreats after six weeks or so, he says.

Manitoba has built infrastructure to mitigate flood damage. Farmers protect their farmyards and are prepared to seed after the flood waters recede, Lemon says.

But much of the pasture and hayland in Manitoba is in low-lying areas.

“When your pasture or alfalfa stand floods, it doesn’t come back. And you don’t just get to go out in the field and seed it again in the spring after the flood’s disappeared,” says Lemon. It can take several years for that land to come back in productivity.

And Manitoba has been dealing with a long stretch of flooding and excess moisture, Lemon points out. Producers expect to deal with an extremely wet or dry year every now and then.

“But when it’s seven out of 10 years or eight out of 10 years, that’s where it gets to the point where it’s unsustainable.”

Lemon says the hardest-hit beef producers were the younger ones who didn’t have the equity to ride out those rough years. Many found off-farm work and left the industry.

The 2016 Census reported 36,013 beef operations in Canada in 2016, a drop of over 1,000 from 2011. And there were 4,133 fewer farms producing hay in the latest census. Lemon says the Manitoba Beef Producers stated it represented 7,000 beef producers in its boilerplate statements until the latest census came out. Now they’re down to 6,500.

The next big chance

When it comes to farmland buyers in north-eastern Saskatchewan, Sutter says she sees a little bit of everything. “We’ve still got young farmers wanting to move from Alberta to Saskatchewan.”

Helping young farmers build their farms is one of the things she likes about ag real estate. But, she notes, she’s not seeing as many farms for sale right now, which might be due to tabling land values and less favourable markets.

Sutter says it’s hard to say what we’ll see in the next ag census. But if farming gets tough again, she expects to see more aging farmers exit.

“Who will pick these farms up if they do? Some will be farmers looking to expand and some will be a new farmer looking to move,” she says. Over time, she expects to see fewer producers, mainly due to the risky nature of farming.

Still, despite all the challenges, Sutter remains relatively optimistic about farming. “Good grain land will always be farmed, and good cattle producers will always produce another crop of calves.”

Snyder also thinks the number of young people coming back to Saskatchewan farms has flattened recently, mainly due to margins. And both Snyder and Lemon point out that while the percentage of young farmers grew in the last census, the number was so low to start with that the percentage gain looks more dramatic than it really is.

“It’s certainly encouraging to see the young producers bump up a bit. Any upward movement there is promising,” Lemon says. But the small increase in young farmers doesn’t come close to the absolute number of aging farmers. Plus the producers left in the depleted middle demographic are advancing through the age brackets, he says.

Gamble, who has 35 years of ag industry experience, also expects to see the average age of farmers climb in the next census, partly because it’s a trend in the Canadian population. But it’s also because of multi-generational farms, he says.

“You’ve got farm operations that have, in some cases, three generations working in them, and the older operator can slow down and still be involved.”

Ultimately, Gamble trusts the evidence of his eyes, and thinks we don’t need to be too concerned about the mid-career farmer. Across the industry, he says, 35- to 40-year-olds are stepping into leadership roles, and they are creating their own futures.

About the author

Field Editor

Lisa Guenther is a field editor for Country Guide.

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