Despite the Prairie crisis, many operations are diversifying—and thriving
SUCCESS DOWN ON THE FARM
Despite the Prairie crisis, many operations are diversifying—and thriving
DAVE PRICE takes a visitor for a driving tour of just part of Sunterra Enterprises, a multi-million-dollar farming, food processing and retail conglomerate which he oversees along with four younger brothers. The trip encompasses a huge swath of rolling crop and ranch land near Acme, Alta., about an hour’s drive northeast of Calgary. Along the way, we pass the section (260 ha) where Price’s parents, Stan and Flo, started a traditional mixed farmgrain and livestock—in the 1950s. Price, 52, relates how adjacent lands were acquired over the years from neighbouring
farmers, either as they retired or because they could no longer make a go of it. He casually refers to numbers that hint at the overall size of the enterprise. Over here is a barn with 20,000 animals, just part of the 150,000 Sunterra pigs raised for slaughter annually. Over there, some 15,000 cattle peer through the railings of a high-tech feedlot, designed by Price’s brother, Doug. In between is more than a third of the 5,300 ha of land the family crops each year.
The Price empire doesn’t end here. There are other croplands, and other feed-
lots, as far afield as Czar, 300 km to the northeast. There’s the 2,500-hogs-perweek processing plant in Trochu, due north of Acme. Then there’s perhaps the most unique aspect of the operation: six upscale supermarkets in Calgary and Edmonton where customers can shop for Sunterra-branded steaks, sausages and pork chops along with general grocery items. All told, Sunterra employs about 600 people and generates more than $100 million in annual revenues. Which kind of begs the question: can this still be considered a family farm and, if so, what does
that say about the future of agriculture in Western Canada?
Dave Price has his own thoughts. “We do consider ourselves a family farm, though I’m sure many would not,” he says with a wry smile. “To me, it’s more the character of the business than how many bodies are involved.” As for agricultural trends, that’s a subject that clearly animates the normally soft-spoken Price. Consolidation—fewer farmers, larger farms—has been going on for decades, he notes. “But it’s the same in every sector, with the possible exception”—another wry smile—“of government.” Continues Price: “We don’t have the corner barber shop or the one-mechanic garage. Why should farming be any different? Unless you want to turn it into a social program. But that would be a tremendous waste of resources and a huge burden on the taxpaying public. The media and politicians like to focus
on the traditional image of farming, what I’d call a 1960s image, of an individual carrying a bucket and dumping it over a rail fence. Certainly, those places exist, but they are not producing the food for this country, or for export.”
Robert Wilson, vice-president of academic services at Olds College, an agricultural institution initially established in central Alberta 89 years ago to train immigrant prairie farmers, has a more succinct description of what the Prices have wrought. “Some family,” he observes, “some farm!”
Wilson says it admiringly. He thinks Sunterra is a leading example of a farmbased operation that is “vertically integrated”—a favourite buzzword in the agri-food business these days. That means it has diverse interests and manages to survive the industry’s harshest weather and economic cycles by spreading risks over what
used to be three distinct aspects of agriculture: production, processing and marketing. Moreover, says Wilson, Sunterra is a farming success story—and far from the only one. “There’s all kinds of this stuff going on, and it gets very little attention. What we hear about is when there is a drought or other natural disaster, or some U.S. trade action delivers a new blow. People start to predict the end of agriculture as we know it, but it’s not really true. This is a pretty vibrant industry which still has a lot of legs despite real difficulties in some sectors.”
SUCCESSFUL FARMING is certainly not what is making the headlines this summer. While farmers in the southern Prairies are looking at a decent crop year thanks to torrential rains in late June, north-central Alberta and Saskatchewan are in the grip of a severe and prolonged
drought. Grain farmers, faced with fields caked by the sun into virtual sand lots and menaced by hordes of ravenous grasshoppers, are either plowing this year’s withered crop into the ground or salvaging what they can for animal feed; last week, the Canadian Wheat Board said this year’s wheat output may be 17 per cent lower than last year’s. Cattlemen are auctioning off herds they can no longer afford to feed at bargain-basement prices. For many, it will take years to recover—if they ever do.
For those who can look up from the ravages of Mother Nature long enough, there is another dire, and longer-term, threat looming on the horizon. For years, Canadian farmers have complained they compete on an unlevel playing field because of the far more generous subsidies American and European governments pay to their
producers. On May 13, George W. Bush ratcheted up protectionism to a whole new level by signing into law the latest U.S. Farm Bill. The legislation, which Republicans hope will win them votes in critical Midwestern and Southern states during this fall’s congressional elections, increased crop and livestock subsidies to American producers to a whopping $300 billion over 10 years. For the first time, support was extended to specialty crops such as chick peas and lentils, which Canadian farmers had been encouraged to grow as an alternative to heavily subsidized wheat. Another ominous provision, effective in 2004, would force U.S. feedlots, meat packers and retailers to separately identify foreign-born livestock sent to the U.S. to be raised or processed. Canadian ranchers fear the costs and inconvenience of so-
called “country-of-origin labelling” could lead U.S. operators to shut out Canadian beef and cattle exports, which last year were worth $2.2 billion.
The sheer scope of the U.S. law provoked demands for Ottawa to respond in kind with a new round of subsidies and retaliatory trade action. On June 20, the federal government announced a six-year, $5.2billion farm safety-net package, largely an extension of earlier funding initiatives. Most observers saw the aid as an attempt to offset the impact of foreign subsidies, though Agriculture Minister Lyle Vanclief insisted it was intended to help farmers adjust to a variety of new challenges. Ottawa fears that admitting it is responding to foreign trade policies would open the floodgates to other aggrieved sectors, most notably the softwood lumber industry.
As for retaliatory trade measures, more than two months after the U.S. Farm Bill became law, none have emerged. Although some farm groups would like to see the U.S. law challenged before the World Trade Organization, many think Ottawa’s hands are tied by its own protectionist policies. Chief among these is a perennial bugbear of Prairie farmers: long-standing federal tariffs that shield dairy and poultry producers, who are largely concentrated in vote-rich Ontario and Quebec, from freemarket forces. “We are not willing to put everything on the table,” says Art Enns, president of the Western Canadian Wheat Growers Association. “Will we ever do so? Given the politics, I question it.”
SOME BELIEVE the hand-wringing over subsidies—and even the weather—is misguided. Wilson argues that U.S. and European support for farmers is a political and cultural fact of life, and there is no point complaining about it. The educator and agrologist adds that periodic droughts and other natural disasters are also an inevitable, albeit heartbreaking, part of farming. Nor should people unduly mourn that, according to Statistics Canada, nearly 30,000 farms disappeared over the past five years, while the average size of the remaining holdings increased by 11.2 per cent. More revealing, thinks Wilson, is that, despite recent adversities, productivity and the amount of land under cultivation are steadily on the rise.
What Wilson is suggesting—and he is far from alone—is that farmers, to succeed, must harness the economies of scale afforded by running larger, technically sophisticated operations—or find innovative ways to reach new markets and meet changing consumer demands. Or, as in the case of Sunterra, do all of the above.
In addition to steadily expanding their business, the Prices have been consistent innovators. As early as 1970, the family adopted advanced breeding techniques aimed at producing healthier, cleaner and leaner pigs. The push for lean meat was driven largely by economics; it costs three to five times more in feed and takes longer to put a pound of fat on an animal as a pound of lean. But it also positioned them to take advantage of subsequent diet trends. Similarly, the emphasis on safety and environmental standards has strong
appeal to countries like Japan, where Sunterra now exports 80 per cent of its pork, freeing it from dependence on U.S. markets. And while Sunterra has been hurt by this year’s drought, size and prudence have helped cushion the blow; the Prices try to keep a year’s supply of animal feed in storage, and are large enough to avoid the sell-off of livestock that is happening all around them.
The move by the Prices, starting in the late 1980s, to process and retail their own meat was again designed to control quality and target discriminating consumers willing to pay a bit extra to know where their food came from. “Farmers always say everyone else in the food industry is making money but them,” says Glen Price, who oversees the family’s chain of urban supermarkets. “What we’ve tried to do is figure out where the costs and benefits were in getting involved downstream from just raising an animal and selling it.”
Sunterra is unusual in its diversity, but other small family farms have similarly evolved from humble beginnings into forces to be reckoned with. Florian Possberg bought his first eight-hectare farm near Humboldt, Sask., in 1975, and that year produced 900 pigs for slaughter. He expanded steadily and in 1995 brought in two veterinarians and a chartered accountant as investors to found a corporate entity, Big Sky Farms. Since then, growth has mushroomed: Big Sky now produces 450,000 hogs annually at various sites and aims to deliver two million a year by 2008.
As he expands, Possberg, 51, has weathered criticism, both from environmentalists and those who feel he is squeezing out smaller players. But Possberg, a proud Saskatchewanian, makes no apologies. The global hog industry, he says, is extremely competitive—and size matters. At the same time, the vast majority of his pigs are processed within the province and fed
local grains, creating jobs and income for rural Saskatchewan. While the father of eight (three sons are involved in the business) concedes Big Sky is not a typical family farm, he says it’s a model that should be emulated. Adds Possberg: “It’s about passing on something viable to the next generation.”
Getting bigger, though, is not the only road to success. Brent VanKoughnet, 41, has taken over management of the 280-ha family farm he grew up on near Carman, Man., and turned it into a kind of laboratory for the agri-food industry. He does field-scale trials for corporate clients of different crop varieties and agricultural practices, providing them with digital photo updates of how it’s going. He also runs his own consulting business, Agri Skills Inc., and travels across the country, talking about the future of farming. His message, in sum: get innovative, or get out.
“The first thing I tell people,” says VanKoughnet, “is to wipe your mind clear of all the mythology of the family farm. I also tell them the intellectual capital on our farms is worth more than the land.” As an example of ingenuity, he cites a small group of Manitoba farmers who, a few years ago, abandoned traditional crops to grow grass seed and supply it on an exclusive basis to golf courses; those individuals are now millionaires. VanKoughnet says there are many similar, though unheralded, examples. “No one has a problem talking about how bad things are. But the most innovative producers are very quiet, because talking about it is like giving a gift to your competitor.”
With a master’s degree in agriculture economics, VanKoughnet is perhaps typical of a younger generation of farmers who see what they do more as a business than a way of life. At Olds College, which graduates about 300 agriculture students a year, Wilson says the curriculum is increasingly geared toward management rather than labour skills. He is struck by the students’ enthusiasm, despite the challenges they face. “Many come from the farm and want to carry on the family business,” he says. “They are very upbeat.” At a time when farm news is dominated by reports of drought, marauding insects and debilitating foreign subsidies, a bit of optimism may be the most precious commodity of all. [¡HI
‘The first thing I tell people is to wipe your mind clear of all the mythology of the family farm. I also tell them the intellectual capital is worth more than the land.’
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