Hard times in the wheat belt

John Hay July 16 1984

Hard times in the wheat belt

John Hay July 16 1984

Hard times in the wheat belt


John Hay

Prairie farmers have reaped a bumper crop of troubles in recent years, and 41-year-old John Jago has suffered virtually all of them in his struggle to keep his farm near Reston, Man. After a combination of low grain prices and high interest rates left Jago $350,000 in debt last year, the Virden Credit Union foreclosed and seized half his 1,280-acre property. Because he could not find a lender who would finance his spring planting, Jago had to go to work for other farmers to earn money for fuel, seed and fertilizer. Then, last week a new setback struck Jago and other farmers across the West: swarms of grasshoppers attacked fields which some farmers could not afford to spray, causing millions of dollars in crop damage. Now, an increasing number of western farmers are surrendering to bankruptcy, while others are demanding urgent government help. Some are simply quitting. Said Jago, who is grimly hanging on: “Farmers are walking into banks, handing over their keys and saying, ‘You farm it.’ ” Across the Prairies farmers have endured one misfortune after another. For the past three years net incomes have fallen because grain prices have stayed flat or declined while farm operating

costs increased. At the same time, many farmers who took out bank loans in the boom years of 1975 to 1980 to expand or improve their operations were caught in a squeeze when interest rates began to climb. The number of bankruptcies has soared. In Manitoba there was only one farm bankruptcy in 1979; in 1983 there were 62. And industry experts hold out little hope for an improvement this

little hope an summer, because 105 million tons of unsold grain stocks on the world market are still depressing prices.

Some farmers are organizing to draw attention to their misfortune.

In April a group of Alberta farmers formed a chapter of the Ontariobased Canadian Farmers’ Survival Association and in June they began a round-the-clock occupation of the Camrose office of the Alberta Agriculture Development Corp. They are demanding a moratorium on foreclosures, not just for farmers but for small businesses and homeowners. Said organizer

James Friesen, a 33-year-old hog farmer and father of seven: “I just got mad when they tried to take away my farm.” Friesen was incensed when the ADC moved to foreclose on his property near Caroline for a $200,000 loan. Said Friesen: “My equity had fallen so much that my place was worth less than the loan.” The ADC has agreed to review his case.

Friesen’s difficulties are widely shared. Federal government figures show that there were 33 Alberta farm bankruptcies between January and May this year, up from 19 in the same five months last year. But bankruptcies tell only part of the story. Said Doug Livingstone, the first vice-president of the Alberta Wheat Pool: “There are no statistics, but probably for every bankruptcy in Alberta there’s another farmer who throws his key on his bank doorstep and walks away.” Income for Alberta’s 57,000 farms has declined to $608 million in 1983 from $764 million in 1981.

In Saskatchewan the outlook is just as grim. Farm bankruptcies in the first five months of 1984 stood at 25, compared to 18 in the same period last year. Net farm income fell to $876 million last year from $1.2 billion in 1981, with a further erosion expected this year. Peter Wunder, a grain farmer near Foam Lake, Sask., for one, has decided to give up. “It just doesn’t make sense any more,” he said. “I had to borrow $30,000 just to have the money to put my crop in this year and last year I had a net income of $386 out of a gross of $90,000.” For his part, Garf Stevenson, vice-president of the 70,000-member Saskatchewan Wheat Pool, is convinced that only higher grain prices can revive the industry. “Unless prices recover,” he said, “nothing will really help.” Wunder added that in 1971 he could buy a tractor for $12,500 and sell wheat for $5 a bushel. The tractor now would cost

$57,000, but wheat is worth only $4 a bushel.

In Manitoba, where the hard-pressed Jago is president of the provincial wing of the Canadian Farmers’ Survival Association, low grain prices are a major problem for farmers. Net farm income in the province actually rose to $288 million last year from $254 million in 1981, but government experts have forecast a decline this year. An estimated 25 per cent of the borrowers at the Farm Credit Corp. in Manitoba are behind on their payments, and

there were 30 bankruptcies in the first five

months of the year, com-

pared to 24 in the same period last year. Among those leaving agriculture is Donald Cuvelier of Killarney, Man., who rented out his property and sold his equipment this spring after 18 years on the land. Said Cuvelier: “We love farming but we were just worrying too much. We saw too many people, after years of hard work, lose everything.”

Western farm profits depend largely on international grain prices. And those prices are determined by supply, demand, unpredictable interventions by governments and the weather. Last year prices for such grains as barley, canola (rapeseed) and flaxseed rose as a result of drought in the United States and a U.S. government crop-reduction program. This year U.S. production is expected to increase and, with normal yields, prices inevitably will decline. Agriculture department experts in Ottawa expect international wheat prices to remain at their current low levels this year because world stocks are high. Prairie farmers responded to those forecasts this spring by cutting their wheat acreages and expanding acreages for oats, barley and canola.

Governments are providing some assistance to the farmers. In Saskatchewan, Premier Grant Devine’s Conservative government in May introduced a $4-million emergency fund that will be used to guarantee loans of as much as $100,000 for farmers with financially sound operations who need to borrow short-term operating capital. In Manitoba, Howard Pawley’s NDP government has set up a variety of programs to provide grants and interest-free loans, a $12.5-million loan guarantee fund and a $30-million program to provide lines of credit at fixed rates for farmers who cannot borrow through other channels. In Alberta, Premier Peter Lougheed’s Conservative administration has provided reduced fuel prices and interest rate relief, but it refuses to respond to the demands of the Camrose protesters for relief from foreclosures. “We do not believe a moratorium on foreclosures is the right approach to solving farmers’ problems,” said Kenneth Moholitny, an assistant to Agriculture Minister LeRoy Fjordbotten. “If you do that, credit will really dry up.”

In addition to available provincial assistance, Prairie farmers can look forward to payments from the Western Grain Stabilization Fund approved by Parliament last month—an average of $2,500 to $3,000 for each farmer. For some, the money might come just in time to help save their farms. But for other, less fortunate farmers this summer may well be their last on the land.

Dale Eisler

Nancy Johnson Smith

Andrew Nikiforuk