Data crunchers have been busy tracking the changes in Canadian agriculture over the past decade.
When it comes to commodity prices, the answer is: not much. Key commodities finished off the decade trading in pretty much the same range they were at the start. If you factor in inflation, farmers are paid less per unit of production than they were a decade ago.
The same doesn’t apply to their cost of production. Buying wheat seed cost about $20 an acre in 2010. In 2020, it’s $24. Seeding canola cost about $38 per acre in 2010. In 2020, it’s $62.50. Land taxes were $4.35 per acre in 2010. This year, they are up to $15. Fertilizer and fuel are up too, although herbicide and fungicide costs haven’t changed all that much.
Some would say that’s just the commodity business. As production efficiencies increase the volume of output, the cost per unit declines.
As a new decade dawns, however, there is a subtle but significant shift underway in Prairie agriculture as farmers come to grips with the reality that increasing volatility in weather and markets means they are facing more risk in a thin-margin business and government “risk-management” subsidies are falling short.
To manage that risk, they must find a way to increase their margins. In the past, farmers have focused on more yield, although that increases their costs and the markets have consistently rewarded those efforts with lower prices.
More farmers are now looking harder at what they can do with the resources under their control to reduce their costs of production without unduly reducing yields. Invariably that leads to strategies that better manage soil and water.
In the 1990s, they called this approach LISA (low-input sustainable agriculture). The skeptics back then, often working for companies that sold farmers fertilizer and chemicals, scoffed and dubbed it “low-income sustainable agriculture” and said it would lead to global starvation to boot.
Nowadays, however, it’s referred to as “regenerative agriculture” and the farmers practising it are borrowing concepts from all farming systems, including organic, to make it work. What’s more, herbicide manufacturers have realized that herbicide-resistant weeds will limit the lifespan of their products unless farmers incorporate more integrated approaches.
The new attitude, coupled with adoption of precision technologies that help them track how their input investments are influencing production, is creating some surprising revelations.
Terry Aberhart, an award-winning agronomy coach and CE0 of a 15,000-acre family farm near Langenburg, Sask., told a recent conference that when they shifted their metrics to profit-mapping from yield mapping, they found it was costing them more to farm some of the acres on their farm than they were earning back. “Do you want to pay to go to work?” he asked.
They took a 20-acre patch out of annual crop production and sowed it to hay. They now sell hay from that land and have boosted the profit from the rest of the field by 50 per cent. “We are doing less and making more,” he said.
Aberhart told his audience the equipment size farmers require is likely to shrink.
“The trend in agriculture equipment and practices, generally speaking, in broad-acre crops has generally been bigger, bigger and bigger,” he said. “But I think that’s totally going to get flipped on its head.”
Smaller fields and more agile equipment doesn’t necessarily mean smaller farms, just more intensive management. On some farms, it has also meant the addition of “crops” that are important for reasons other than their market potential.
Taking acres that don’t pay out of annual crop production is an opportunity for more trees, wetlands and habitat on the landscape. More biodiversity is associated with healthier soil and that means better fertility and lower expenses for the farmer.
After decades of suggesting that farming is like baking a cake mix (just add water to seed and other ingredients and stir), successful farming in the 2020s will be knowledge-intensive: smart operators at the centre of a complex and more importantly — dynamic — decision matrix.
Yes, it’s still about the yield, but it’s no longer only about the yield.