Golden: Canadian canola
Canola prices hit record highs in February as China bought furiously to feed its hogs © Reuters

Chris van den Heuvel, a third-generation beef and dairy farmer in Port Hood, Nova Scotia, has endured his share of problems in recent years — everything from railway strikes, to the US-China trade war, and now the pandemic.

“You start to look at that oftentimes with a feeling of despair and say: ‘No matter what I do, we’ve got all of these things that are constantly pushing us back down’,” says van den Heuvel, 48.

But, with an end to the pandemic in sight, plus stronger commodity prices and new farming technologies — such as agriculture data tools and GPS livestock collars — the outlook is brightening.

For many of the farms that dot Canada’s vastness, however, it has been a tough few years. Although they supply much of the world’s wheat and canola, as well as meat for North American and Asian markets — generating C$143bn ($115bn) annually, employing 2.3m people and contributing 7.4 per cent of GDP — the sector was C$115bn in debt in 2019, according to Statistics Canada.

Andria Jones-Bitton, an epidemiologist at Canada’s University of Guelph who studies mental health on farms, says: “I can think of a lovely couple with three young children, in the dairy industry, and with the cost of quota [a type of production licence] and the cost of putting in a new barn, they are a couple of million dollars in debt.” When her team surveyed 1,100 Canadian farmers, they identified high levels of stress and exhaustion, caused by poor weather, fears of losing the family farm and vilification by animal rights activists.

Income has been under pressure, too. Expensive machinery, industry consolidation and lower crop prices resulted in total farm incomes falling from C$7bn in 2017 to C$3.9bn in 2018, according to Statistics Canada. Then, in 2019, China temporarily blocked imports of Canadian canola, beef and pork following the arrest in Vancouver of an executive of Chinese tech group Huawei, at the behest of US authorities.

“We lost probably 10 to 20 per cent in the value of the commodity,” says Todd Lewis, 59, who grows canola on his fifth-generation 3,850-hectare farm in Gray, Saskatchewan. “We’re in a high-volume, low-margin business.”

Meanwhile, the US-China trade war caused markets to see-saw and a weeks-long train operators’ strike in 2019 hampered shipments of grain and fertiliser.

After enduring four successive poor seasons, prices finally rallied in 2020. “Then you just get the rug pulled out from underneath you with Covid,” says van den Heuvel. Suddenly, farmers were forced to navigate transport restrictions, shifting demand and outbreaks at processing plants.

Yet government forecasts suggest that total net income on Canadian farms rose by 22 per cent in 2020, to C$16.5bn, driven by strong growth in grain and oilseeds.

In February, canola prices hit record highs as China, which had by then switched its punitive measures to Australia, bought furiously to feed its hogs.

“Canada has a tremendous land base, excellent and innovative farmers, access to capital, and sound rule of law — a combination that not many other countries have,” says Jon Driedger, an analyst with LeftField Commodity Research, a Manitoba agricultural data group. “There are so many people that are driven and motivated and passionate about this industry that you would be a fool to bet against them.”

Lasting prosperity will depend on new technologies, though, according to Driedger. “As the expression goes, innovate or die,” he says.

One group seeking to innovate is Farmers Edge, in Winnipeg, which collects and analyses farm data — such as soil moisture from satellite images — to help boost crop yields and sales. The company recently raised C$125m through an initial public offering of shares. “Everybody talks about ag-tech as a good place to invest but it has not always been the easiest for companies to go out and raise capital,” notes Wade Barnes, chief executive. “Hopefully [the IPO] will open up the floodgates for investment.” Farmers Edge says 13 per cent of Canadian farms currently use its technology.

Van den Heuvel has installed robotic milkers and an automatic feed-pushing system for his calves, and is close to buying GPS collars for his herd.

Innovation does not diminish the need for government assistance, farmer bodies point out. Canadian growers must still compete with their US counterparts, who enjoy billions of dollars in assistance annually. But, after several difficult years, the mood at the farm gate is improving.

“We talked to our forefathers about some of the bad drought years in the 1930s and the flooding years in the 1950s and we’ve done a much better job at adapting,” says Lewis. “Agriculture has changed so much, it’s hard to compare the good old days and today.”

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article