Global market, feed prices bring farm crisis to a head
Making a living from the farm has been difficult for years, but P.E.I. farmers say a strong Canadian dollar and feed prices pumped up by demand for grain to make ethanol have pushed the problem to crisis levels.
On Prince Edward Island, also known as the million-acre farm, farmers have stopped talking about how making a living is difficult. The conversation has turned to thinking about what P.E.I. might look like without agriculture. It sounds extreme, but farmers, particularly livestock farmers, are getting out of the business in alarming numbers.
In 2002 there were about 400 Island hog farmers. Current estimates are around 75. The beef industry fared better, but prospects for the future are poor. Provincial Treasurer Wes Sheridan estimates 30 to 40 per cent of livestock farmers will close up their businesses in the next year, either by choice or because they will be forced out by banks.
"You could see a lot of land growing up in alders, because there's just nothing there to replace what agriculture is now," says beef farmer Allan Glover.
A combination of factors has brought on this dramatic decline, starting with international competition and centralized buying. In the last few years, two grocery chains, Loblaws and Sobeys, have come to dominate the retail market. In their efforts to reduce costs, the two have centralized buying. That trend has extended to the United States as well. Food prices are now effectively set in Chicago, with no reference to local market conditions or local costs of production.
The system has worked for the big chains and for consumers. In 1997, Canadians were spending about 12.5 per cent of their income on food. In 2007, that has dropped to an estimated 9.25 per cent. Many studies have found that with an increased focus on processed foods, farmers are getting a smaller share of that shrinking pool of money.
These were the conditions making life difficult for farmers. This year in particular added two more problems. A stronger Canadian dollar is making imports from the United States, with its highly subsidized agriculture industry, and China, with its cheaper labour, more attractive to buyers at the big chains. Along with that downward price pressure have come higher costs. A demand for corn to make ethanol has led to higher prices for feed.
The increased pressure has proved to be too much for many producers.
Searching for alternatives
Some producers have fought back against the international commodity pricing of agricultural products by attempting to grow different products. The Island's hog processing plant has moved toward organic and antibiotic-free production, but establishing new markets is a slow process. The plant came within hours of shutting down this month, and its future is still uncertain.
Farmers have also tried to grow crops that are less traditional for the Island. In the late 1990s, Island Quality Vegetables was launched as a processor of coll crops: broccoli and cauliflower.
Cleaned and cut here, the vegetables were shipped to freezing plants in Maine and Quebec and packaged in New York. But about three years ago, Chinese frozen produce began to appear in the New York plant. This was quickly followed by new price pressures on P.E.I. farmers. In January, the New York company stopped buying P.E.I. produce altogether.
Island Quality Vegetables is no longer operating.
The problem of buying local
People in the Maritimes consume more beef and pork than is produced here, and some wonder if local farms could be saved if people bought local products.
But determining what is a local product can be difficult for consumers. Many meats are not labelled as to their origin, and even a pack of frozen vegetables that says "Product of Canada" could be full of produce grown in China. Because the labour and packaging are more valuable than the produce, the "Product of Canada" label is allowed.
Even for farmers successfully selling their products locally, price is a major factor.
L and S Meats is one of eight small abattoirs scattered around the province. It slaughters livestock for local farmers and sells directly to consumers. Owner Leigh Peterson paid a $1.45 a pound for cattle when the store opened in 1980. Twenty-seven years later he's paying $1.30 a pound.
Some consumers may go out of their way to buy local, but they're only willing to pay so much of a premium.
While there are still price pressures, direct selling does provide a boost for some Island farmers. But those farmers are in a minority. Without significant change in the industry, many more Island farmers will go out of business.