WINNIPEG, Manitoba (Reuters) - The average Canadian farm grew to a record size in 2011, even as the number of farms shrank to a record low, helping level the field for bulked up farm operations with the Canadian Wheat Board monopoly set to end and the world’s biggest diversified commodities trader, Glencore, set to enter the market.
The average Canadian farm grew about 7 percent since 2006 to 778 acres in 2011, continuing a long-term trend, Statistics Canada’s Census of Agriculture showed on Thursday,
The country’s agricultural sector is gearing for its biggest change in decades.
The Wheat Board will give up its 69-year-old grain marketing monopoly in Western Canada on August 1, leaving farmers to sell directly to grain handlers.
By summer, Swiss commodity trader Glencore International PLC is expected to complete its takeover of top Canadian grain handler Viterra Inc, bringing in a major new player alongside Cargill and Richardson International.
At One Earth Farms, possibly Canada’s largest with 95,000 acres of cropland and 8,000 cows, going bigger means more negotiating clout, said Chief Executive Larry Ruud.
“For us, the advantage is economies of scale, the ability to get better discounts (on supplies) because of volume purchases, as well as on sales (of production), the ability to garner a better premium,” Ruud said.
Canadian farms have steadily increased in size since the 1920s as improving technology made it easier to manage more land.
“As far as I can see, it’s driven by farm machinery and the ability of individuals to keep spreading the capital (cost) over more acres,” said Brian Oleson, head of the University of Manitoba’s department of agribusiness.
The number of farms dropped 10 percent over the five-year period to about 206,000 - the lowest on record - continuing a trend since the 1950s of accelerating urbanization, Statscan said. Farmers are also getting older as they get out of the industry; their average age climbed two years to 54.
Canada is the biggest producer of canola, or rapeseed, and the top exporter of spring wheat, durum and oats. It is the third-biggest shipper of beef and pork.
One Earth leases its land from aboriginal bands and private landowners, and employs many aboriginals on the farms across Alberta and Saskatchewan.
That geographic sprawl itself, across varying types of soil suited to different crops, also gives One Earth flexibility in what it can grow and a hedge against bad weather that can wreck a harvest.
The move to bigger farms “has been there since time began and technology continues to help drive the growth,” Ruud said.
While three quarters of Canadian farms still earn gross receipts of less than C$250,000 ($249,500), farms grossing more than C$1 million are experiencing the quickest growth, the census data showed.
Bigger doesn’t look better to Manitoba farmer Brian VanMackelberg.
“If there’s not as many farmers, there’s not as many people in a community,” he said, as he prepared his fields for seeding near Deloraine, Manitoba.
Coming up with the money to keep up is also a challenge.
“Land prices are going up and in order to keep up to the expansion, you have to pay those prices. And your machinery is bigger, and there’s more of it.”
In the United States, the number of farms grew 4 percent to 2.2 million in 2007 from five years earlier, but has been trending downward since World War Two. The average U.S. farm shrank to 418 acres in 2007 from 441 acres in 2002, according to U.S. census data.
Canada’s total farmland dropped 4 percent in 2011 to a 90-year low of 160.2 million acres, from five years earlier.
The reason for the drop traces back to 2003, when the discovery of mad cow disease on a Canadian farm weakened prices and caused export markets to close, said Erik Dorff, an analyst at Statscan.
Ranchers chose to hold on to more of their cattle at the time of the earlier census in 2006 rather than sell at low prices, but improving values since then gave them an exit by 2011, he said.
“What we heard when we went out to the fields was it had been a difficult 10 years and prices had improved enough that folks who were going to get out, thought it was a good time to sell,” Dorff said.
The biggest drops in farm area were in pastures and fields planted with cattle feed like hay and alfalfa. Excluding those crops, cropland area grew 2 percent.
Severe spring flooding took millions of acres out of production in 2011, but Statscan didn’t reduce the total farm area to reflect those conditions because farmers are expected to replant that land this spring, Dorff said.
The number of farms with cattle breeding stock fell by more than a quarter, while farms with pigs slipped by one-third amid high feed prices and a strong Canadian dollar.
The census reflects farmers’ preference for growing canola over spring wheat, which lost its position as the biggest field crop to canola and slipped in area for the fourth straight census.
Statscan received census responses from more than 200,000 farmers, with a reference date of May 10, 2011.
($1 = 1.0021 Canadian dollars)
Editing by Marguerita Choy