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Down on the farm: B.C. agriculture is facing threats on all sides, including inflation, high interest rates and climate disasters
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Peter Simonsen sees the threats to B.C. agriculture all around him.
“I look out and it’s dead grapes and empty trees,” said the Naramata fruit grower, who is president of the B.C. Fruit Tree Growers’ Association.
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“There’s a great deal of despair in the industry right now — and I don’t think despair is too strong of a word.”
Across the province, the pressures facing farmers can be seen in the for-sale signs posted on dairy farms and on the gates barring access to chicken barns to prevent the spread of avian flu and to the smaller herds of beef cows grazing on new spring grass.
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“Right now, between the financial environment and the actual environment, farmers are being squeezed,” said Gord Houweling, a realtor with B.C. Farm and Ranch Realty. “There’s not one sector that’s not impacted by this. All our farmers are struggling right now.”
For many, there’s fear that high interest rates and climate change will lead to fewer farms and more foreclosures in the coming months. In April, farmers reported the lowest confidence in their business performance of any Canadian sector, according to research by the Canadian Federation of Independent Business.
Senior policy analyst Emily Boston called the numbers “shockingly low.”
“Being at the bottom of that scale does not bode well,” she said.
The number of farms in B.C. has been dropping for almost a decade. The latest agriculture census recorded a 10 per cent drop in the number of farms in B.C. between 2016 and 2021 — more than five times the decrease at the national level. The average age of B.C. farmers also rose during that time, while more farmers had a second job off the farm.
Meanwhile, from 2015 to 2019, the cost to operate a farm in B.C. rose 25 per cent, while revenue rose only 23 per cent, according to an economic impact study done for the B.C. Agriculture Council in 2020.
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“So long as increases in expenses continue to outpace cash receipts, the rising cost of production will remain a threat to the growth of the sector,” noted the study by accounting firm MNP.
Danielle Synotte, executive director of the B.C. Agriculture Council, said there’s a risk some farmers might decide to stop farming due to “debt obligations” or challenges like flooding or drought.
“There’s a saying that every farm is just two bad years away from going out of business,” she said. “I think we’ve had two bad years.”
While food prices have gone up in grocery stores, returns for farmers haven’t kept up with the rising cost of production, including high interest rates on farmland, insurance that has doubled or tripled after natural disasters, and dramatic increases in the cost of feed and equipment, like tractors.
“It can be death by a thousand cuts,” said Synotte.
Renee Prasad, head of the agriculture department at the University of the Fraser Valley, sees the pressure facing students who come from farm families.
“The people who grow our food are just stressed out,” she said. “They look at their parents and say ‘I don’t want that stress.’ And who can blame them?”
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When Simonsen’s kids decided to work on the family farm, he was thrilled. Five years later, “I kind of wish they hadn’t,” he said.
“Farmers keep telling me I just want to get out, I wish I could get out.”
The 2021 heat dome marked the first of several bad seasons for fruit growers. In January, he watched the weather station on his farm go from 3 C to -24 in 12 hours before plunging to -32 two days later. The sudden cold snap killed most of the B.C. peach, nectarine and apricot crop, as well as cherries and wine grapes.
In Metro Vancouver and the Fraser Valley, high land prices and the rapid tripling of interest rates have led to situation where returns on growing food are no longer enough to cover some mortgage payments.
“If you paid $100,000 an acre for a 100-acre parcel, that’s $10 million. How do you serve that debt growing blueberries or vegetables?” said Houweling, who has several listings in the Fraser Valley.
As a result, sales have started to slow, and there has been downward pressure on land prices as more farmers are being forced to deleverage — selling land in an effort to reduce debt.
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Houweling said farmers have no recourse when banks start to call loans.
He’s written to B.C. MPs to warn them of the growing problem, explaining the data is often several months behind the reality on the ground, and asking for more protection from creditors. He pointed to the farm debt review boards that helped stave off financial ruin for many farmers in the 1980s.
“Keep in mind most farms have the equity, but are now falling behind on payments,” he wrote. “Given time most, if not all, can overcome this.”
Senior economist Justin Shepherd at Farm Credit Canada said land equity is usually enough to stave off bankruptcies in agriculture. Many farms will be able to weather “macroeconomic challenges,” with challenges related to weather possibly a larger threat.
Krystine McInnes, an organic vegetable grower in Cawston, understands that all too well. After her farm flooded in 2021, the bank moved to foreclose. While her property has proven difficult to sell, she’s been seeking federal disaster assistance and putting together a plan to return the property to its natural state.
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“If anyone says they want to farm, I tell them they’re crazy,” she said. “It’s so hard to succeed when you’re fighting against so many things in nature, as well as government red tape and regulations. It’s pushing our farmers to the brink.”
Postmedia News reached out to farmers in several industries to determine if agriculture in B.C. could be facing a crisis. While the challenges facing farmers are different across industries and regions, each one said it was a tough time to be producing food.
Many said they felt penalized by the provincial carbon tax, which applies to agricultural inputs that they can’t reduce, such as fuel for tractors, but they were grateful for government support to upgrade infrastructure to meet challenges, such as adding fans to barns or irrigation systems for crops.
Some pointed out that matching programs can only be used by farmers who have cash to spend, benefiting farms that are already doing well and leaving behind those that are struggling. Some spoke about the importance of food security as B.C. imports about two-thirds of its food, and climate change could also impact the countries where much of our food is grown.
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Anju Gill, executive director of the B.C. Blueberry Council, said depressed prices have hurt blueberry farmers for several years in a row, along with inflation, high interest rates and climate change.
Asked if she expected to see foreclosures, she said it was highly dependent on when a farmer entered the industry.
“Recent entrants are likely to have it tougher” because they’ve had to borrow more to meet “astronomical” land prices, she said.
Dairy farmer Casey Pruim said drought and fires have led to feed shortages and high costs to feed cows, while high interest rates have hit farmers in areas where land prices are high. But the chair of B.C. Dairy was optimistic about a recent announcement that would increase milk processing in B.C.
Kevin Boon, general manager of the B.C. Cattlemen’s Association, said ranchers have sold off cows in response to the drought, but the price for beef has been strong. He said there’s always concern about small operations that don’t have the margins to stay viable.
“Every time we fix one wheel, another one falls off,” he said about the ups and downs of the industry.
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Boon also identified the squeeze facing B.C. farmers. With consumers also facing inflation, high interest rates and sky-high housing costs, the answer isn’t necessarily raising food prices.
In the face of successive disasters, government aid packages aren’t sustainable either, said Synotte.
The B.C. Agriculture Council is working with government on a proactive approach to helping the sector.
“We need to look at the key investment areas we need to focus on to have competitiveness and sustainability going forward,” she said.
Chicken farmer Brad Driediger, whose industry is also facing pressure from avian influenza, said most farmers aren’t driven by profits, which makes them resilient.
“Most farmers do it because they care about producing food,” he said. “They do it because their hearts are in it.”
gluymes@postmedia.com
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