By Tom Collins
COLLINGWOOD — Keith Currie had just started farming in the early 1980s when an economic crisis hit. The interest rate on his first mortgage was around 19.5 per cent and farmers — especially new ones — were struggling to pay their bills. The United States saw bank failures hit 279 before the end of the decade.
Some sectors weren’t as affected by high interest rates, and established farmers could weather the turmoil as their loans were probably signed before the interest rates skyrocketed.
Fast forward to 2020, and COVID-19 has created a crisis worse than the 1980s, says the president of the Ontario Federation of Agriculture.
“This has hit everybody all at the same time,” said Currie, a flower and sweet corn grower and crop farmer. “In this case, everybody is a victim.”
In late April, Sylvain Charlebois, senior director of the agri-food analytics lab at Dalhousie University, said Canada could lose 15 per cent of its farms by the end of 2020. He later clarified that was a conservative estimate. Currie agreed.
“There’s some immediate economic pain out there and there’s going to be a number of people that aren’t going to survive this,” Currie said.
By the end of April, the impact by sector included just about everyone:
• The Canadian Cattlemen’s Association estimates the backlog of 100,000 head of cattle ready for market with nowhere to be processed is costing $400,000 a day to feed, and that the Canadian beef industry will lose a half-billion dollars by June on market-ready cattle if things stay the same.
• The GFO estimates losses to net income of $135 per acre for corn and $20 per acre for soybeans based on current prices. Overall, grain farmers could see $550 million in total revenue loss if futures prices don’t rebound to pre-COVID-19 levels.
• The Canadian Pork Council estimated pork producers were losing roughly $30-$50 on every market hog.
• Chicken volume was cut by 15 per cent and Ontario dairy farmers cut back on 2 % to 5 % of production.
• Veal sales dried up as it is hugely dependent on the restaurant industry.
• Sheep farmers missed Easter, one of the most important sales events of the year, and now flocks are building up.
• The equine industry has been devastated as boarders aren’t paying and, in turn, demand for feedstock and bedding supplied by farmers is uncertain.
• Edible horticulture crops could see a huge drop in acreage planted due to issues getting foreign workers into Ontario in time. In fact, the Holland Marsh, north of Toronto, typically supplies Ontario with 90 per cent of its fresh vegetables and forecasts a drop in production by 50 per cent.
• Some vegetables, like potatoes and mushrooms, have almost nowhere to go since the restaurant sector shut down.
• The flower sector took huge blow as Easter to Mother’s Day usually accounts for 60 per cent of the annual business. “We’re looking at greenhouses now that have a quarter-of-a-million dollar compost pile out back because flowers can’t be sold,” said Currie.
“Nobody is going to be exempt from this,” Currie added. “There’s going to pain right across the whole gamut.”
He said some sectors won’t know the full impact for a while. If pork and beef producers reduce their herds, it could take months to ramp up pig production and several years to rebuild a beef herd.
Post-pandemic, Currie argued that the country will need agri-food to restart the economy. “It’s not going to be tourism. It’s not going to be automobiles. It’s not going to be the airline industry. It’s not going to be the restaurants. The government will need to invest in agri-food to stimulate jobs.”
Charlebois said there were factors other than COVID-19 that will see 15 per cent of farmers leave the industry by the end of 2020. Many farmers already believed farming was on a verge of a crisis months before COVID-19 hit, and they needed a great 2020 to get over a tough stretch from 2018-2019. The carbon tax, which increased this year, will also eat away at the bottom line.
Charlebois said this year is playing out similarly to the BSE crisis of 2003, when the U.S. and other countries shut their borders and beef prices dropped by 50 to 80 per cent. The difference between then and now is that COVID-19 is impacting more than just beef, and the processing sector has left many livestock producers without an option to get rid of their animals.
“In the hog industry, there’s no space to store pigs and the product is basically almost worthless right now,” he said. “We came into the crisis with a crisis in processing, and we’re paying for it now.”
He added that the loss of restaurants — he estimates 25 per cent of restaurants won’t re-open — will also play a large role. Crops such as potatoes and mushrooms would normally find a home in restaurants, “but that home no longer exists.”
Guelph-based Agri-Food Economic Systems researcher Al Mussell, agrees that 2020 will see an exodus of farms but he is more optimistic. A 15 per cent exodus is too high, he said.
“That’s a bit of a phantom number that is being chased,” he said, adding that there are very few farm bankruptcies, which shows that farmers are willing to live in extremely low or tough-income conditions.
Mussell is also the chair of the Ontario Pork Industry Council. “(Pork producers were) expecting 2020 to be a good year, and they’re absolutely getting clobbered now.”
He said farmers are right in saying that business risk management programs are not enough to handle the COVID-19 crisis.
“The BRM set was not designed with something like this in mind,” he said. “Whatever term you want to use for it, unprecedented, extraordinary, (BRM is) not meant for this. So of course, it’s not going to be good enough.”
There were almost 126,000 personal bankruptcies in 2016. According to the Office of the Superintendent of Bankruptcy Canada, only 23 Canadian farms in 2018 (including five in Ontario) declared bankruptcy. From January to October last year, only one Ontario farm filed for bankruptcy.
Said Mussell: “People are prepared to carry on under very poor circumstances.”
15 per cent of farms gone by end of 2020?
By Tom Collins