Bigger is Definitely Better — If it’s Yield and Not Acreage

Bigger is Definitely Better — If it’s Yield and Not Acreage

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combine harvesting wheat

One of the accepted truisms about agriculture in Western Canada is farms will continue to get bigger.
Prairie farmers began expanding almost as soon as they took up residence under the homesteading law of 1872, a trend that continues. The 2011 census of agriculture saw average farm sizes grow between 13 and 15 per cent in the three Prairie provinces during five years.
Averages don’t tell the whole story. There are viable farms that crop tens of thousands of acres, just as there are equally viable operations that still function quite nicely on several hundred. Studies show that while small farms often achieve a higher return per acre, they don’t generate enough to support the family, which is why more than half of family farms rely on off-farm income.
But both past and recent history suggest there is such a thing as too big. There were about 90 so-called Bonanza farms of between 3,000 and 100,000 acres on the northern Great Plains in the late 1800s.
Most failed within a generation. Hired management was able to leverage their scale for marketing and input purchases, 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 finding labour — up to 1,000 men per farm plus the women to cook for them.
A few years ago, One Earth Farms, a subsidiary of Toronto-based Sprott Management Resource Corp., announced plans to crop up to a million acres in Western Canada. At one point, it reached 200,000. It’s now down to 5,000 acres and has quit crop production altogether to focus on producing organic beef.
Earlier this month, Broadacre Agriculture Inc., a modern-day mega-farm operating 65,000 acres of owned and leased land in Saskatchewan, entered creditor protection just four years into its business plan to become the “pre-eminent farm operator in Canada.”
According to the affidavit from its chief financial officer, its crops didn’t yield as well as expected, it fell behind on its payments and its investors and creditors lost faith. It also didn’t help that it had recently borrowed from private lenders at 20 per cent interest.
“The unfortunate reality is the company has never been profitable,” the affidavit states.
Here in Canada, where the cost of land, a lack of labour, outside capital and agronomic management have all emerged as constraints to sheer scale — the owner-operator model is the only one that has demonstrated it can thrive through multiple generations.
U.S. agricultural economist John Ikerd once characterized the big-little farm debate as having less to do with the actual acres on the farm, than the philosophy of the farmer farming it.
As Ikerd described it, a farmer who has five acres and dreams about owning 10 is a big farmer. A farmer with 1,000 acres who’d like to draw the same production and revenue from 600 is small.
It’s an important context as global attention increasingly turns to how best to increase production but not acreage.
Commodity markets are drowning right now under record world production of corn, wheat and soybeans, but global yield gains have been stagnating in recent times — a disturbing trend a team of U.S. researchers set out to quantify in 2013.
“During the 1980s and 1990s, nearly all of the increased food production was met on existing land by increasing yields,” said Ken Cassman, a University of Nebraska agronomist who worked on the study.
He noted an abrupt increase of 24 million acres of farmed land per year starting in 2000.
“This is the fastest rate of crop area expansion in human history. Some have called this an agricultural time bomb, because it is not sustainable,” Cassman said, noting an urgent need to increase yields through better management and implement policies that hold agriculture on existing area.
The answer to the big-little question remains elusive. But it seems farmers of all sizes are facing increasing pressure to grow bigger — without becoming bigger.

Full article here.

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