The impact of management skills on farm incomes in Canada

This study assesses the reported farm income crisis in Canada and uses farm financial data to illustrate the importance and impact that management skills and practices have on farm income and net worth. For grain and oilseed farms, large farms produce higher revenues per hectare and achieve economies of scale on operating expenses, interest and depreciation, making them significantly more profitable than smaller or average sized farms. The higher profits associated with large farms are partly returns to good farm management. While farmland investment returns are competitive with stock and bond markets, grain and oilseed farm labour and management returns are not competitive with provincial average wages and salaries. On average, Canadian grain and oilseed farm families have less disposable income to spend today but have considerably more wealth than their non-farm family neighbours. The higher wealth level for farm families makes it increasingly difficult for governments to acknowledge a farm crisis and increase farm subsidies.