Richard Robert, chairman of the Canadian Farm Business Management Council, learned lessons about self-reliance when he toured farms in New Zealand last year, taking a look at what happens when a government is bankrupt and cancels all farm subsidies.
He would not recommend a sudden end to government subsidies here, but he also says our Canadian agriculture ministers could shift their emphasis to helping farmers improve their education and management and farmers who depend on government subsidies and policies ought to think long and hard about making some radical changes.
For example, although he's a dairy farmer, he said supply management is risky because it depends on political support and, as New Zealand farmers learned, that can evaporate. His advice to Canadian dairy and poultry farmers is to reduce their debts.
He also crops about 600 acres of corn and soybeans in Quebec near New Liskeard, Ont.
He says Canadian politicians should retain some degree of support for farmers and food companies because he found New Zealanders are reluctant to make long-term investments because they are totally dependent on markets that can quickly change. For example, a change in currency values has an immediate impact on prices and profits because 90 per cent of production is exported.
Prior to the to the crisis, 30 per cent of farm income in New Zealand was government subsidies. When they vanished, farming families were devastated, there were suicides, family violence, depression and more than 800 bankruptcies.
Farmers at or near retirement age lost their “pensions” when land and livestock prices collapsed and they had to find off-farm employment.
Farm incomes plunged by 40 per cent, banks wrote off 40 per cent of their farm debt and stopped lending to farmers. Young people left their family farms seeking other careers.
Young businesses, those that had recently expanded and those that were inefficient were hardest hit, he said. It was in some ways similar to the 1980-82 high-interest crisis that devastated Canadian farming.
But today, he found farmers do not want to return to the subsidies and agricultural policies prior to 1988. They are glad to have the government out of their businesses and off their backs. They don't spend any time filling out government forms; instead they focus on their business plans and management.
Today the sheep industry continues to decline to levels as low as 1955, but dairy and deer are increasing.
Dairy farmers graze cattle on excellent-quality pastures year round, he said. The chief challenge is enough water to survive droughts. One man can handle a herd of 200 dairy cattle because there is no labour required to handle feed or manure.
Milk sells for 30 cents a litre, but consumers pay about $2.50 a litre, he said. What he did not explain is that dairy farmers buy shares in Fonterra, which is the dominant dairy co-operative, and the number or shares governs their access to market and a substantial portion of their annual revenues.
Between 95 and 98 per cent of the milk is exported as dairy products, mainly to Asian markets. That explains why New Zealand is pressing hard for an end to supply management in Canada believing new Zealand could then expand its markets.
Robert said the New Zealand government now concentrates its agriculture-policy spending on university research, education and extension.
Most farmers hire private consultants to help them identify how they can reduce their cost of production or improve their farm management. Farmers do not talk about yields per hectare or milk per cow, but about profits per hectare and per cow, he said.
“They stay much closer to their markets,” he said, shifting to production that will enable them to survive or to reduce risks. For example, one dairy farm also markets lily bulbs and has sheep. Another farm has deer, sheep, hunting, fishing and tourism. It also has a supply-chain arrangement for genetically-special wool for production of a line of clothing.