The report, Challenging Past—Incredible Future: A look at past income and future prospects for Ontario’s oilseed and grain industry, uses data from Statistics Canada’s Farm Financial Surveys to examine how the industry changed during the challenging years of 1997-2004.

"The prospects are terrific," say David Sparling and Kristine Jack, in a new report from the Guelph-based Institute of Agri-Food Policy Innovation. "When agriculture addresses major societal problems such as the environment and renewable fuel, the rules change. Governments will invest in new solutions, at levels never before seen in the industry." The report explains that the grains and oilseed sector is dominated by small farms which are more vulnerable to shocks and sustained price pressure and have limited ability to cushion the impact of lower prices or increasing costs. In 2004, 63 per cent of Ontario grain and oilseed farms took in under $100,000 per year. But that was down from 73 per cent in 1997. Most of the nearly 2,000 farmers who left the industry during those difficult days were from this category. Many who stayed in used off-farm income to survive.

The situation was a bit better for the top farmers in the $250,000 to $500,000 revenue class. "There’s a sweet spot here," says the report. "Margins have been consistently higher and the financial benefits from doubling in size and, likely moving beyond a one-person farm, appear minimal."  

Even though farms over the $1-million revenue mark made the most money overall, there was a definite movement to the middle between 1997 and 2004.  While the numbers of the smallest and largest farms shrank, the number in the $250,000-$500,000 range grew by more than one quarter.

Looking ahead, better times offer an opportunity for the industry to shift its focus from short-term survival to long-term success.  Higher prices mean less need for business risk management payments.  Sparling suggests investing some of that money into research and development to help secure the future of the Ontario industry in 10 years.

But a short-term spike in corn prices is not reason to jump for joy, argues Picton-area farmer Lloyd Crowe. Diesel fuel prices are up and nitrogen prices have increased by 50 per cent, he said. So what does he think of Sparling’s optimism: "There’s his world and then there is the real world."

Corn price is now dropping, he said, hovering at $145 a tonne in late April. "You have to have 200 bushel yields to even think about a profit. The cost of production this year is scary. It’s the nitrogen."

In his area, two crop farmers began selling their 1,000-acres because their debt load was too heavy to get through the latest rally in prices, he said.

Added to the problem, 40 per cent of farmers don’t buy crop insurance because it often works against them. It’s the old story about losing one field due to flooding but because you had a bumper crop in the others, you don’t get a payout for your loss.

Other farmers can’t live without the insurance, including Crowe. "I live in Prince Edward County," he said. "I have to sleep at night."

The always outspoken Moose Creek crop farmer Alain Leduc says its early to talk about good times. "You have to live it for a few years," he said. "The oils and grains people in the last 15 years almost went through a depression. I know grain producers who will be reeling for another year until they get on their feet."

Referring to Sparling, he said: "If he’s right, he’s a hero but I don’t think he’s right."

Another aspect of the future depends on farmers themselves, Leduc says. "It comes down to good business and management decisions."

Poor management skills is a big issue on farms, as too many farmers lose control of debt and spend money faster than it comes in. "Cash flow is king in this industry," he said. As for big expenses, "you control your debt or your debt will control you. A lot of guys think with their heart. They get emotional and they see their neighbour doing something and think I can do it.

"The biggest problem with agriculture is people think it’s a way of life," he said, noting that many people don’t want farming to lose that special status with governments as being a way of life. But as for Leduc, he’s running a business.

See the report at the website of the Institute of Agri-Food Policy Innovation.