The Canadian farming population is aging: between 1996 and 2006, the average age of farmers increased from 48 to 52. Furthermore, there are fewer and fewer young people to replace retiring farmers. This situation is worrisome as young farmers guarantee the future of agriculture and play a key role in rural economic development. Indeed, many other activities in rural communities depend on the agricultural sector, including milling, hardware, slaughter and transport. Aware of these various issues and interested in determining how the federal government can improve its programs and policies to keep young farmers in the industry, the Standing Committee on Agriculture and Agri-Food (hereinafter referred to as the “Committee”) decided to consult farmers. To this end, the Committee travelled, between April 26 to May 13, 2010, to the four western provinces, Ontario, Quebec and the Maritime provinces. The Committee met with 132 farmers—including young farmers—and provincial farm organizations and visited 18 farms and agriculture related businesses. The Committee also held hearings in Ottawa during which it consulted 17 witnesses.

These hearings and visits allowed the members of the Committee to realize that Canadian young farmers are innovative, market-oriented, enterprising and, because they work in a sector that generally requires high capital investments for relatively low returns, are more than ordinary entrepreneurs. During its tour of Canada, the Committee met a large number of young farmers and found that they have a clear understanding of the challenges they face to enter and prosper in the agriculture sector. The Committee mainly focussed on young farmers’ comments to make its recommendations on general policy directions or specific programs.

The federal government supports young farmers’ organizations such as the Canadian Young Farmers Forum (CYFF) and the Canadian 4-H Council, and offers a number of measures such as the capital gains exemption to facilitate farm succession. The Committee, however, notes that there is no comprehensive federal policy targeting young or new farmers. As one witness pointed out, despite the fact that the title of the main agriculture policy framework in Canada is “Growing Forward,” young farmers are not mentioned in the text of the agreement. This omission could be rectified as the future of agriculture rests on new entrants that can invigorate the industry.

Young farmers also know perfectly well that agriculture faces numerous challenges related to increasing costs of production, reduced margins, trade and marketing issues, and government support. The Committee agrees with their message that the growth of agriculture in this country depends on its profitability. As a young farmer told the Committee:

I don't see many young farmers wanting to get into a business that you have to spend money to make none.[1]

The sections in this report follow the three principal themes covered by the witnesses. The first section addresses how farmers have seen agriculture change from a time when hard work was the main factor to make a living to today’s environment where advanced management skills and the adoption of new technologies are more and more essential for success. The second section discusses the challenges facing young farmers that want to enter the sector, and the need to provide specific programs to overcome these challenges. The third section looks at the main incentive required to attract new entrants i.e., improving the profitability of agriculture.

The Committee travelled across Canada to meet young farmers during a busy time of the year for agricultural producers. The Committee wishes to thank all the witnesses that took time away from their daily operations to contribute to this study.

Any discussion on young farmers and the future of agriculture cannot start without a better understanding of how farmers perceive the changes in agriculture during the last few decades. Urbanization and an aging population, globalization of the economy, and consolidation throughout the agri-food chain have brought fundamental and structural changes at the farm level. More specifically, the need to develop new markets and to comply with consumer demands has required an adaptation of production structure and practices within the agricultural sector. Although this adaptation creates new opportunities, it poses some challenges to agricultural stakeholders, notably young farmers.

Agricultural production is facing an aging farming population. Statistics Canada data indicate that the average age of farmers increased by about four years between 1996 and 2006 (Table 1).

Table 1—Average Age of Farm Operators [2]

Source: Statistics Canada, Historical Data from the Census of Agriculture, Section 6.

The aging of the population has led to a 14% drop in farmers under 55 and an 11% rise in farmers 55 and over (Figure 1). This means there are fewer and fewer young people to replace retiring farmers.

Figure 1—Change in Number of Farm Operators by Age in Canada

Source: Statistics Canada, Historical Data from the Census of Agriculture, Section 6.

The number of farms dropped by 17% between 1996 and 2006 (i.e., from about 277,000 to 229,000). This decline, coupled with a growth of the production and the adoption of new technologies, increased the size of operations by 20% over the same period (see Appendix A for detailed statistics).[3] This rise in farm size is seen as a way to improve farm profitability as, according to some witnesses, it enables farmers to benefit from the advantages of economies of scale.

Farms are growing right now in size because that is what makes them profitable [...] it’s the economies of scale that earn us dollars.[4]

It’s a game of economies of scale. We all know that. Bigger isn’t always better, but it’s just something you have to do to pay the bills, we have to get those economies of scale.[5]

However, this concentration of the agricultural sector should not eclipse the importance of maintaining small operations as well.

There are many smaller successful farms [...]. A lot of them are involved around direct marketing of their own produce, vegetable gardens and so forth, and these people are actually making money farming.[6]

Indeed, small operations, as well as big ones, contribute to the vitality of rural communities. As mentioned by Mr Doug Scott, they also allow young farmers to start out their career.[7] Furthermore, the presence of older operations with a large amount of capital and their ability to overpay for assets and land can create a barrier to the entrance of young farmers into the agricultural sector.

Witnesses also recognized that economies of scale, the tendency towards concentration, and the need to stay competitive both domestically and internationally are many factors that incite producers to invest in their operations. Thus, agriculture is more and more capital intensive. Producers have to invest in buildings, machinery and other equipments to become more efficient and be able to satisfy consumer demand for low produce prices. Market conditions also contribute to increasing the value of assets such as land and quotas. This can cause some challenges to young farmers as the rise in asset values are not always covered by sufficient income.

On the demand side, consumers have increasingly high expectations with regards to food quality, food safety and environmentally-friendly practices. Meeting these requirements is a challenge for Canadian farmers as they have to adopt new technologies, improve their agricultural practices and comply with standards and regulations. This adjustment implies higher costs of operation that producers are willing to incur. But as farms have become bigger, more capital intensive, and high-tech, agriculture’s image in society has not kept up with this reality. Witnesses indicated that they are aware of the growing disconnect between the general population and agriculture: many people do not know where the food they eat comes from or simply do not realize what farming is about.

Because many consumers lack this understanding of agriculture, many producers—mainly farmers from non supply-managed production—deplore the fact that they are not able to obtain higher prices that reflect the increasing costs of production.

People want the best quality for the cheapest price.[8]

I think something that's involving Canada too is the mentality of consumers and their want for cheaper food. I know in other countries that produce a high quality standard of food as we do in Canada as well, they're able to pass it on to their consumers. That's something we need to be able to educate our consumers better on, to show the standards we have in Canada, to pass that on to our consumers.[9]

It causes us to wonder why we continue to strive to produce safe, high quality food for people who don't value or appreciate the importance of local food.[10]

According to the witnesses, however, there is a renewed interest from consumers in where and how food is grown. With regard to niche markets, producers are interested in producing certified commodities or developing local food initiatives that will allow them to obtain fair prices from the market.

We've done some market surveys and consumer testing, and certainly understand that there is some very goodwill at the moment for the consumer to be purchasing locally and to be purchasing B.C.[11]

Although farmers are price takers, and consumer demands result in increased production costs, witnesses indicated that they are aware of the opportunities that these needs might create in terms of green technology and niche markets. Indeed, the production of “alternative energy” is seen as a way to diversify farmers’ source of income.

Another alternative in the farming industry that would benefit everyone and the future of the farming industry is green energy. Having another source of income to pay for rising costs in production annually is always beneficial. Methane digesters, wind turbines, solar panels, pressed solids, for example, undigested fibres, are just a few examples.[12]

Witnesses recognized that to compete in a more globalized economy and to take advantage of new opportunities, management skills are essential and new farmers must approach their operations like businesses. Succeeding in the agricultural sector now requires a different skill set than two generations ago and producers are aware of this change:

I'll even take it one step further to my grandfather's time, when whoever worked the hardest got ahead in life. The next one was whoever could find efficiencies would get ahead. In my generation now it's who's willing to adapt to technology, who's willing to look beyond just the meat and potatoes of a grease gun and a wrench that is in your back pocket. Agronomy and growing crops, that's in your back pocket. You can't even play the game unless you have those two. What is setting us apart in profitability is the marketing, the business arrangements, even if it is a multinational—partnerships. It is not being scared to take on the new challenges [...] things from satellite imagery variable rating, which we're doing on our farm, to RTK guidance.[13] Those are the minor things we're adjusting and those are making the difference now. It's using the computer and using technology to get ahead. The other things are important as heck to be there, but that's to even get in the game.[14]

Agriculture has all it takes to be a motivating and interesting career choice because it requires entrepreneurial and management skills, the use of state-of-the-art knowledge and technologies to grow products, because it provides a unique lifestyle, and because of the rewarding feeling of feeding the world.