Canadian agriculture "probably the least profitable in the world" (23/10/2007)

NOTE: As one of the biggest GM crop cultivating countries in the world, Canada is often held up as a model of efficiency and profitability. But as this interview with Darrin Qualman, director of research for Canada's National Farmers Union, makes clear, the truth is very different.

EXTRACT: ...on a rough, per-acre basis, crop producers here are probably losing about $50 to $100 on every acre – as reflected in subsidy and debt levels. Canada's high-input, high-tech, high-cost food production model is probably the least profitable in the world.


Interview with Darrin Qualman
Seedling, October 2007


Darrin Qualman is director of research for Canada's National Farmers Union, where he has worked for 12 years. Before that, he farmed near Saskatoon, Saskatchewan. Darrin is the author of several reports, including The Farm Crisis, Bigger Farms, and the Myths of Competition and Efficiency and, with Nettie Wiebe, The Structural Adjustment of Canadian Agriculture.

GRAIN: Many farmers in the developing world think of farmers in the North as prosperous, but that isn't the experience of Canadian farmers since the mid-1980s, is it?

Qualman: No, it isn't. The 1960s and 1970s were pretty good for Canadian farmers. The crash in farm income came in 1985 concurrently with the rise of corporate concentration and the spread of massive input dependence. Canada adopted a model of high-output, high-tech, high-input, high-energy-use, high-cost farming...

Canada now spends about US$4 billion per year on farm support payments... On top of these publicly-funded payments, farmers also support their farm losses by working off-farm – one spouse or both take jobs in local towns or cities to earn money to support the farm. Farmers also have utilised increased debt as a way of keeping their farms afloat; debt today is triple its mid-1980s level. On a per-acre basis, debt now stands at US$675 per acre – more than land sells for in many areas. In order to stave off insolvency, as well as using subsidies, off-farm income and debt, farmers have also begun to draw down their equity – not replacing machinery or fixing buildings. And many have borrowed against their farms' intergenerational future – using for living expenses money that would otherwise be used to finance the entry of the next generation of farmers.

...Big-acreage, big-input farming goes with big subsidies. The former seems to require the latter, contrary to rhetoric about 'efficiency.'

Getting back to Canada, on a rough, per-acre basis, crop producers here are probably losing about $50 to $100 on every acre – as reflected in subsidy and debt levels. Canada's high-input, high-tech, high-cost food production model is probably the least profitable in the world.

GRAIN: You say that Canadian farmers are consistently losing money, but we know that the whole industrial food system generates billions of dollars. Who is making the profits?

Qualman: ...The year 2004 was one of the three worst in history for Canadian farmers in terms of the net incomes they were able to earn from the markets – losses were more than $2 billion. But 2004 was the most profitable year to date for the agribusiness corporations that make up the rest of the agri-food chain. The vast majority of the firms posted record or near-record profits (see The Farm Crisis and Corporate Profits). When we look at the agri-food chain, we see record losses for family farmers at the same time as record profits for the transnationals that dominate the rest of the chain...

What is your position on GMOs? Aren't a lot of farmers growing GMOs in areas where the NFU is active?

Genetically modified (GM) seeds are a key part of the maximum-production, max-technology, max-input, max-energy-use, max-cost system outlined above. Canadian net farm income over the past 20 years has been falling. Today, it stands at its lowest level ever. Were it not for massive taxpayer-funded support programmes, off-farm income, access to credit, etc., farming in Canada would have to cease. The transnationals that dominate the rest of the chain – energy, chemicals, seeds, processing, retailing – have managed to set themselves up to reap 110 per cent of the profits that would normally remain on our farms. Let me explain it this way. The price of wheat is now about $5. Let’s say the cost of production is $7. If the selling price were to rise to $7, the input suppliers would use their market power to increase input prices to capture all the profit from that $7 wheat. Thus, the cost of production would rise to $8 or $9. If the world price rose to those levels, we’d see another round of input price increases. This is not true for all price levels – Monsanto et al. could not raise input prices high enough to capture all the profits from, say, $20 wheat. But the situation holds for nearly every price level we can reasonably expect. There is a structural aspect to the current system wherein it becomes nearly impossible for farmers to meet costs of production because companies can use market power to ensure that costs rise with prices. So, as technology use has gone up, profitability has gone down.

The preceding paragraph seems at odds with the reality that many, many farmers are adopting GM seeds. Let's look at that. First, the data clearly shows that GM seeds do not increase yields or profitability (see, for instance, GM Crops: Not Needed on the Island). If there is any correlation between farmers' expenditures on high-tech seeds and profitability (net farm income), it is an inverse one – over the past 20 years, as farmers' seed purchases have tripled their incomes have crashed. GM seeds do not increase profitability. They do not increase yield. They do not decrease costs.

So why do farmers use them? GM seeds allow you to farm massive acreage. Direct seeding and rapid application of weed-control chemicals allows farmers to cover thousands of acres where previously they could only cover hundreds. So one of the primary effects of GM seeds and the type of farming they facilitate is to reduce dramatically the number of farmers. And farmers have to increase their acreage to survive. As input suppliers raise the price of their products such that per-acre profits drop from $100 to $50 to $5, these same companies, conveniently, provide the technology to allow individual farmers to farm 10 or 20 times the acreage. Per-acre profit drops. Per-farmer profit can be maintained only by farming many more acres. And even then, profitability is elusive, witness the massive subsidies, rising debt, and the growing necessity of off-farm income, mentioned above.

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