The family farm is changing - but not dying
One of the greatest myths of Canadian agriculture is that the family farm is dying. If family farms could talk, they’d likely echo Mark Twain’s quote that “the reports of my death are greatly exaggerated.” I see frequent reports that the family farm is disappearing and “corporate farms” are taking over. It is true that agriculture is changing, but the changes are a reflection of changing technology more than a fundamental change in ownership.
There are clearly fewer farms in Canada. The Figure below (from Statistics Canada) highlights a couple of key points:
There are still many small farms in this country
As small farms decrease, the number of large farms grows but at a slower rate.
The trend is clear. There are fewer small farms. That does, not, however, reflect a change in ownership structure. More than 96% of those farms were family owned. It is true that 23% of the total number of farms are family corporations. Families incorporate farms to reduce risk, leverage tax advantages, and to facilitate the transfer of the farm between generations. Many small businesses incorporate for the same reasons that farmers do.
The share of non-family corporate ownership in primary agriculture is lower than most other sectors. This is likely due to the risk associated with farming. While farms are usually asset rich (land holdings), they often suffer from low margins (a theme across the food system) and highly variable returns. Large corporate shareholders shy away from that kind of high risk.
If “families” are still producing food in Canada, why is there the perception that the family farm is disappearing?
First, the figure above highlights that there are fewer farms generally and much fewer smaller farms. That means fewer family farms but not a smaller proportion of family farms. Family farms are not being gobbled up by large corporations.
Second, the nature of farming is changing. Technology allows us to produce more with less labour. Real prices (adjusted for inflation) have been decreasing over time. This means that farmers are getting paid less per unit of output over time and need to produce more per acre to survive. This has nothing to do with how the food is produced. Many people have a perception of small organic farms that produce for local farmer’s markets. There are, however, organic farms that produce on large acreages. One Saskatchewan farm with 40,000 acres is converting to organic. Interestingly this farm is not a traditional family farm but a partnership between a land investor and a new farmer – again probably counter to the perception of what an organic farm is.
Third, farmers are different today than they were fifty years ago. I look at many of the young people who graduate from the University of Guelph to go home to farm. These people are managers. They embrace technology. They evaluate their options and make strategic changes based on sound business analysis. In short, they are businesspeople – more manager than traditional producer. To me, this is a good thing. Modern agriculture is progressive and management intensive, but it is still in the hands of committed families. Size is not a reflection of quality. Large farms are not heartless factories but well run efficient food producing family businesses.
There is considerable variability in how food is produced. Farm structure, practices and approaches vary greatly. What doesn’t vary much is that these businesses are run by families. The family farm still dominates Canadian agriculture and that isn’t likely to change soon.
Recommended citation format: von Massow, M. "The Family Farm is changing - but not dying”. Food Focus Guelph (48), Department of Food, Agricultural and Resource Economics, University of Guelph, August 14th, 2019.