Ottawa-Canadian farmers need to develop more business savvy as well as get increased respect from the federal government for their contribution to the national economy and reducing greenhouse gas emissions, says a prominent Saskatchewan farm operator in a recent article published by the MacDonald-Laurier Institute

Kristjan Hebert, president of the Hebert Group, said agrifood generates around $143 billion, or 7 percent of Canada’s GDP annually, provides 1 in every 9 jobs and employs a total of 2.3 million people. “Yet agriculture and food remain a forgotten stepchild to other economic sectors, such as oil and gas and manufacturing, and barely receive a mention at budget time.”

It is also ignored in environmental discussions despite the fact Canadian farmers are global leaders in sustainable agriculture, Hebert said. “Two things need to change for Canadian farmers to reach their full potential. One is a more supportive environment from the federal government. The other is for farmers themselves to adopt a more business-minded approach.”

There are “too many small family farms are on life support, subsidized by Canadian tax dollars through government-run insurance programs. Our industry typically resists change. But we need to convince more producers to think like entrepreneurs so they can capture the growth opportunities that lie ahead.”

While there are approximately 189,000 farms in Canada, only about 10 percent have annual sales greater than $1 million and those account for more than 52 percent of the sector’s total operating revenues.

“To my mind, $1 million in farm revenue is a job and below that is a hobby. Only above that does it start to be a real business. Small farms provide a great lifestyle, but they are not a great business model.”

Size does matter in today’s agriculture, which is why there is a growing trend toward consolidation. “Farms are becoming increasingly sophisticated operations – expanding in terms of equipment, use of technology, sales, employees, and bargaining power,” he said.

Farmers are seeing significant consolidation among grain elevators, processors and seed, fertilizer and equipment companies. “Good luck to any small farm that tries to negotiate or strike a deal with these companies. Those who don’t embrace change won’t survive.

“We do not need to do away with the family farm. But farm ownership and attitudes need to be restructured in a way that supports growth, collaboration, and shared equity.”

Farmers approaching retirement should consider bringing in non-family professionals to help run the farm with the family as major shareholders. “The goal is to treat the business as an investment that provides cash for labour, land rent and return on other equity. A farm is really two businesses – a real estate business and a farm operation. These can give the retiring generation certain cash flow, continued equity growth as well as an enterprise that can use the equity to maintain or increase growth. As part of a comprehensive succession plan, the parameters must be set correctly to ensure family equity is not put at significant risk.”

The federal carbon tax and the recent changes to the capital gains tax will also hurt the sector. “A larger capital gains tax bill will certainly hinder the succeeding generation’s ability to buy out their parents’ farms and could result in more farms being sold to non-farm, or even international, owners.”

Agriculture also needs a unified voice in Ottawa. “We have far too many lobby groups, grower groups and crop councils. While these groups have an important role in terms of check-off collection to support research and development, international markets, and advocacy, I believe they struggle to influence policy due to their fragmentation. Their work is often reactive versus proactive, always fighting back against bad policy, proposed changes or global issues. When a minister is faced with more than 400 strategy groups, the easiest route is to do nothing. We need more than photo ops with the agriculture minister on social media. We need size, knowledge, and influence to protect the very thing we are trying to preserve – the family farm.”

This news item prepared for National Newswatch