Early History of Farm Business Management in Alberta

Although farming in Alberta began more than a century ago, a formal “Farm Business Management ” approach to the industry is of more recent origin. While there were a few beginnings prior to World War II, professionalization of the field has developed mainly over the past generation of farm operators. While agricultural vocational schools were established early in this century, the emphasis was on farming husbandry practices, although a few instructors did introduce farm accounting courses on an elementary and “adhoc” basis. Accounting and business analysis were not as crucial then. Most farm inputs were generated within the farm itself Cash flow and insolvency risks were small in comparison to the present day farm business. The roots of professional Farm Business Management (FBM) in Alberta were inadvertently initiated in the late 1930's by agricultural economist Dr. Howard Patterson from Ontario. He was commissioned to undertake a general study of the dairy industry in Alberta. A problem with unreliable year-roundfluid milk supply was developing, but the precipitating crisis was an outbreak of undulant fever caused by farm infected milk. As a result, in 1939 the regulation of fluid milk was put under the Alberta Public Utility Board Delivery quotas were set, and farm milk prices were to be based on producers' “cost of production. ” With several hundred fluid milk producers, each with their own unique costs, the burning question was: whose costs should be used for establishing the year's prices, the lowest, the lowest 25%, the average of all, or some other criterion? Economic efficiency measures became crucial. This was an important step in the introduction of the farm business analysis concept in Alberta. Ben J. McBain B.Sc. (Agric) was hired by the Alberta government, but stationed at the University of Alberta, along with the small contingent of economists from the University and Agriculture Canada economists. McBain's task was to establish farm record keeping systems on representative samples of Alberta fluid milk farmers. These were collected annually, and analyzedfor fluid milk production costs as well as important farm management efficiency measures. This project became known as the Alberta Dairy Cost Studies. Dr. Patterson returned to Ontario, where he established and directed a Farm Economics Branch within the Ontario Department of Agriculture for the remainder of his working life. Farm Business Management was an important component of the Branch, and the continuing information exchanges with the Alberta Farm Cost Studies were beneficial. Physical proximity to the federal Agricultural Economics Division staff housed at the University of Alberta was also of benefit, although their work was not directly in the Farm Business Management field Its long time Head in Alberta was Dr. Clarence Spence.