Business

Where what grows best are costs

Dale Eisler July 2 1979
Business

Where what grows best are costs

Dale Eisler July 2 1979

Where what grows best are costs

They came to feast their eyes on $100 million in farm machinery and see what was new in agriculture, a business that has become a highstakes lifestyle. As farmers, and a sprinkle of curious urbanites, roamed the 3 million square feet of exhibits at the second annual Western Canada Farm Progress Show in Regina last week, it was clearer than ever that getting into farming is becoming dearer than ever. Although used equipment is available at half price, it costs about $120,000 for the new and necessary equipment to farm six quarters (960 acres)—with that much fertile land itself costing upward of $250,000.

Typical is Roy Palmer, 37, of Rocanville, Saskatchewan, 150 miles east of Regina, who farms 13 quarters with his two brothers. To start farming in 1965 he mortgaged his father’s farm; three years ago crushing costs and increased cash needs forced the sales of three of their quarters, which they now lease. While the average Saskatchewan farm in 1976 was 923 acres, up from 845 in 1971, bigger is not always better. Says Palmer: “If you lose $1 a bushel, the more you farm, the more you lose. The bigger you get, in a lot of cases, just means the more you are working for the bank, or mortgage company.” As costs soar, wheat prices have slumped. Although there have been recent suggestions that wheat could reach $6 a bushel within two years, the market peaked in 1974 when wheat reached $4.58 a bushel and slid to $3.27 per bushel last year. “The price of land now is four times what it was when I bought. If a young guy had to borrow money, there is simply no way he could get a return on

the land to even pay the interest, never mind make a living,” says Palmer.

The solution, shrink or get much bigger, is often the same for farm implement dealers. Don Lehman, director of Saskatchewan’s Agricultural Implements Board, says that the costs of starting and maintaining a dealership coupled with the high expectations of major manufacturers have meant the 1,590 dealers licensed in Saskatchewan in 1976 have become 875 this year. “It takes $250,000 for a major dealer to start up and that doesn’t even include display units,” Lehman says. With a building worth $500,000, “if a dealer doesn’t do at least $1 million a year, then he’s not even in business.”

Last year total equipment sales in the province was $385,015,000, with the price for a new tractor averaging about

$40,000. Compared with the national 1978 total farm implement sales of $1.48 billion, that means the Saskatchewan dealers have cornered about 25 per cent of the domestic market. But market demands and the growing size of farms have also made many farmers want bigger, more efficient—and therefore more expensive—equipment.

One of the most popular sights at the Farm Progress Show was an eightwheel drive tractor called Big Roy. It comes complete with a 600-horsepower engine, a closed-circuit television, so the driver can see behind the machine, and a price tag of $200,000. It was obviously out of Roy Palmer’s league but, after all, a guy can always dream. Dale Eisler