“This industry has been looking for additional capital… Agriculture is a great place to be.”
– Larry Ruud, One Earth Farms
A one-million-acre grain and cattle farm planned by Sprott Resource Corp represents a fork in the Prairie road for Canadian agriculture, but the super-farm’s president and chief executive says family farms have more to gain than fear.
Sprott, an investment firm, is spending $27.5 million to launch One Earth Farms on native Indian land in Saskatchewan and Alberta at a time when grain prices are coming off last year’s highs and the world economy sits in recession.
“This large investment I think speaks volumes about the optimism that exists looking ahead to the future of agriculture,” said One Earth Farms Corp. CEO Larry Ruud. “This industry has been looking for additional capital… Agriculture is a great place to be.”
One Earth also helps answer the question of who will carry on Western Canada’s farm tradition with the average age of farmers getting older, Ruud said.
Large corporate grain farms are a novelty in Canada, though well-established in Eastern Europe and South America. Investor-owned corporate beef and pork farms are more common structures in Canada.
One Earth wants long-term agreements on its inputs, such as fertilizer, and its production.
“It has to be win-win,” said Ruud, who is also a director of Viterra, one of Canada’s biggest grain-handling and farm products companies. “Everybody has to keep the lights on every day to stay in business.”
It’s unlikely small farms will face a pricing disadvantage since standard grain prices are based on international supply and demand, said Jim Unterschultz, an associate professor of rural economy at the University of Alberta.
A corporate farm’s negotiating leverage may end up supporting prices for all farmers, said Derek Brewin, an assistant professor of agriculture at the University of Manitoba.
In beef production, there’s more room for One Earth to realize a premium by tailoring production to a specialized product, Unterschultz said, adding that One Earth can also use its size to experiment with new crop varieties and get them to market quickly.
But with One Earth controlling so much farmland, Ruud admits many farmers who have relied on leases may see their planted acreage shrink. Eighteen aboriginal groups, or First Nations, in Saskatchewan and Alberta have signed letters of
intent to lease up to one million acres to One Earth. Most of that land has already been in production.
The average farm size in Canada has been growing as farmers retire and sell their land to others. The 2006 census said the average farm size was 728 acres, up from 676 acres five years earlier.
The family operation still holds some competitive advantages over the super-farm, Brewin said. Families are more willing to work longer hours than hired labour and they have a vested interest in maintaining equipment, he said.
“You have to get to a good size as a family farm to be efficient, but after that I think family farms are more efficient than corporate farms,” Brewin said.
But Unterschultz said technology such as field-mapping has made it less important for farmers to intimately know their land, opening the door to professionally managed grain farms.
One Earth plans to seed at least 20,000 acres this year and begin building its beef cattle herd with at least 1,000 head, Ruud said. This year, planting will include canola, spring wheat and barley.