Tractors roll down streets and snarl traffic in the normally amiable little city of Owen Sound. It is one more defiant gesture by angry farmers in the heart of Ontario’s cattle country as they vent their frustration over the miserable economic conditions that are driving dozens of them into bankruptcy. Ontario Agriculture Minister Lome Henderson is jeered as he boasts about government policies aimed at helping agriculture. Bank officials responsible for hundreds of millions of dollars in loans and mortgages, strangling farm ownership with the tourniquet of high interest rates, are being reviled by struggling farmers as “heartless bastards.”
Across Canada, farmers are angry, and no wonder. Not since the Depression have several key agricultural sectors experienced the catastrophic price squeeze now threatening the livelihood of hundreds of farm operations in pockets across the country. The problem centres in Ontario and nears dangerous levels in Alberta and Quebec where the nation’s “red meat” industry—beef and pork production —is concentrated. Farmers in almost every sector—from potatoes and corn to wheat—are braced for lower incomes this year, but many of the meat producers are facing far worse: annihilation.
This week, an emergency task force set up by the Ontario Federation of Agriculture (OFA) reaches the halfway point in its province-wide survey of farming problems. At the same time, the alarming statistics and the emotional outbursts from farmers underscore the mounting gloom among many agricultural producers. Farm bankruptcies across Canada are up 16 per cent so far this year over the year before. And that does not even take account of the scores of farmers who have cashed in their few remaining assets to get out one step ahead of the sheriff’s order. Beef farmers in Ontario this year are losing close to $70 on every adult animal they sell, of which nearly $60 is the interest payment on loans necessary to keep the farm in operation. The traditional debt-to-equity ratio of 30:70 in farm ownership—with the farmer owning 70 per cent and the bank or federal Farm Credit Corporation (FCC) owning the rest—is perilously close to reversing itself. “There’s no doubt that we’re facing some terrible problems,” says task force Chairman Everett Biggs, formerly Ontario’s deputy agriculture minister.
Behind the statistics are the farmers—and their whole way of lifefacing serious disruption. Harvey Brown, for example, whose family has been farming near Markham, Ont., east of Toronto, since 1834, and whose feedlot of 1,100 cattle used to make him one of the area’s more prosperous men, now says he will be bankrupt within the year if the beef squeeze continues. During the past two years, Brown has lost nearly $250,000 because, like most beef farmers, he loses money with every animal he raises. It’s not just the farmers; the current agricultural plight goes beyond mere grumbling out by the silo or the endless committee meetings at some marketing board or other. Increasingly it is a matter of growing concern even at the most senior levels of government—for the painful reason that the problems in agriculture reflect the deeper economic problems in the nation as a whole.
In the complex structure of Canadian agriculture, some groups of commodities are more sensitive to economic ups and downs than others. A number of key products—notably milk, eggs, chickens, turkeys and, to some extent, wheat—can be produced by farmers almost risk-free, since they operate under a system of “supply management” controlled by federal and provincial marketing boards, which establish production quotas and set prices based on pro-
duction costs. The rest—including horticultural products (such as fruit and vegetables), grains (such as corn and barley) and livestock—follow price levels generally established outside Canada. Those levels are established in competition with other world producers, aided occasionally by government subsidies, or “price stabilization” payments, in times of extreme overproduction or crop failure.
Livestock producers are particularly vulnerable to economic downturns. The enormous cost of purchasing and raising the animals, particularly beef, requires up to a full year of investment before any return. Because there has been little profit in beef feeding for the past three years, feedlot operators buy their stock with borrowed money—thus paying a full year’s interest on each steer or heifer.
It is hardly surprising that the extreme plight of the beef farmer has resulted in a spate of name-calling in recent weeks. Agriculture Minister Eugene Whelan, perhaps in return for the abuse he has been receiving from wrathful farmers, has turned some of it back on the producers themselves. He warns that if they don’t reorganize their traditional free-market methods and submit to a marketing-board structure, they have only themselves to blame. Whelan has also levelled attacks at the nation’s leading chartered banks for their “heartless and insensitive” treatment toward producers through their use of floating-rate loans and their all-too-frequent foreclosures. In an even more surprising statement earlier this month, Whelan pledged that he would resign if the federal government failed to provide aid to farmers in the near future. That was widely interpreted as a sure indicator that some form of relief is included in the forthcoming federal budget or at least that some other measure is planned.
Short-term aid could be provided in several ways. Farmers themselves have asked for a variety of measures, including increased payment levels under price stabilization plans, more funds available through the FCC at interest rates not exceeding 14 per cent, greater access to Small Business Development Bonds and changes in tax laws that would enable farmers to shelter income earned in good years in order to spread it out in years of losses.
It is the long-term solutions that may pose the real problems. Ontario agriculture ministry economist Herb Blum takes the optimistic view. “Most of these kinds of difficulties are largely cyclical and will correct themselves over time,” he declares. But the OFA’s Biggs points to the European Community’s heavily subsidized agricultural program and notes that “there is a place which has known the real meaning of food shortages. Maybe it’s time we put a bit more emphasis on our agricultural needs in North America,” he says. “Or we may wake up one day and find we have no farmers left.”
The story you want is part of the Maclean’s Archives. To access it, log in here or sign up for your free 30-day trial.
Experience anything and everything Maclean's has ever published — over 3,500 issues and 150,000 articles, images and advertisements — since 1905. Browse on your own, or explore our curated collections and timely recommendations.WATCH THIS VIDEO for highlights of everything the Maclean's Archives has to offer.