February 2002     Vol. 3, no. 2

Farmers leaving the field

Geoff Bowlby

Farming is employing fewer and fewer Canadians over time. Where once the labour market was centred around goods-producing industries such as farming and manufacturing, today Canadians are more likely to be employed in the service sector.

Among other factors, rising farm productivity, along with added opportunities in the cities, led to a large exodus from the farm beginning shortly after World War II. In 1946, about 1.2 million people worked on a farm as a main job. Thirty years later, that number had dropped to a little under half a million. The decline slowed for the rest of the century, but employment in other parts of the economy, most notably the service sector, continued to rise (Chart A).

The year 1999 marked the beginning of a more pronounced downward trend when farm employment as a main job plummeted 6% from 1998 (Chart B). In 2000, the rate of decline accelerated, dropping employment by a further 13%. This was followed by another decline in 2001, so that by the end of the year farm employment was 313,000, 26% below where it had been only three years earlier-the largest drop in about 35 years.

However, falling farm employment has not resulted in the large-scale abandonment of farmland. In fact, the experience has been the opposite (Table). The number of hectares planted with major crops such as corn, wheat and hay has never been higher. Between 1998 and 2001, 1.1% more hectares of land were planted with major crops. In general, total production rose, reflecting the seeding of more land and new higher-yielding crop varieties. Poultry meat, egg and milk production has also increased in recent years.

Not all farm output has increased, however. Cattle and pig production have decreased slightly, although these declines are nowhere near the drop in farm employment.

This article has two parts. First, it shows where the decline in farm employment has occurred, and which types of farms and farm workers have been most affected. Second, a number of theories are presented as to why main-job farm employment has declined so dramatically while farm output has not.

Drop in farm employment-highlights

Although widespread throughout most parts of the country, the decrease in farm employment did not affect all provinces equally. Most affected were Alberta, Saskatchewan and Ontario, where main-job farm employment fell by 30% or more (Chart C). Employment in Manitoba also fell substantially, dropping more than 20% over the three years. Declines appeared equally among both men and women in most areas of the country. Employment fell on crop farms more than in other types of farming (Chart D).

An interesting characteristic of the drop in farm employment is the decline among self-employed farmers with no employees (Chart E). This group is more likely to have smaller farms that are run as second jobs. This is important because, as discussed later, some of the decline in main-job farm employment from 1998 to 2001 is thought to be the result of more farms being run as second jobs.

Why is farm employment declining?

A host of reasons, many of which are interrelated, may explain why farm employment is falling. Fewer farms, rising farm productivity, better non-farm employment opportunities resulting in more farming being conducted as a second job, and more off-farm work for farm spouses are all contributing factors. The last two may be particularly significant since the timing of the drop in main-job farm employment coincides with a period of significant increase in off-farm job opportunities.

Fewer but larger farms, rising farm labour productivity

One would assume that dramatically falling farm employment would result from a large drop in the number of farms. The number of farms fell sharply between 1951 and 1976 and then more slowly for the rest of the century, following the same pattern as farm employment (Chart F).

However, as the number of farms declined, the average farm size increased. In effect, individual farmers have been farming more land and producing more food. Past trends show a correlation not only between the number of farms and main-job farm employment, but also between main-job farm employment and labour productivity.

In the mid 1990s leading up to the decline in main-job farm employment, new farm and machinery investment increased substantially, resulting in some substitution of capital for labour (Chart G). As farmers invested, the total value of farm machinery and equipment began to rise sharply in 1994. By 2000, the value had risen 53%, the largest increase since the 1970s.

More second-job farming activity

Although farm productivity has probably increased, it would seem unlikely that farms could produce a similar amount as three years earlier with 26% fewer workers. While productivity increases contributed to the downward trend in the Labour Force Survey (LFS) measurement of farm employment, it is also likely that many individuals are increasingly operating their farms as second jobs. The LFS industry and occupation data are based on a person's main work activity. When the LFS shows a decrease in agricultural employment, it means that fewer people are employed on farms as their main job. The farm may still operate but as the farm operator's second job. As opportunities for farmers to work more hours in other jobs increase, some farm operators may find that their main job becomes, for example, truck driver instead of farmer, even though the farm continues to produce the same amount of beef, milk or poultry.

Certainly employment growth outside agriculture was very strong between 1998 and 2000. If farm operators had switched their main activity from farming, one would expect relatively strong employment growth in industries that require similar skills (Chart H). According to the 1998 Survey of Labour and Income Dynamics, roughly 15% of people employed in agriculture had an off-farm job-one of the highest rates of multiple job-holding of any industry. Of the farmers who held multiple jobs, over half worked in transportation and warehousing (12%), manufacturing (12%), retail and wholesale trade (11%), health care and social assistance (10%), or educational services (9%).

Between 1998 and 2000, as main-job employment fell in agriculture, it rose in transportation (11%), manufacturing (12%), trade (11%), health and social assistance (9%), and education (4%). This suggests that off-farm job opportunities for farm owners improved dramatically-at least during 1999 and 2000.

In 2001, labour market conditions took a turn for the worse. Opportunities for off-farm work diminished, but still agricultural employment continued to decline-albeit at a reduced pace from 2000. Although important, rising off-farm work is clearly not the only factor that determines the number of main-job farmers.

Fewer main-job farmers per household as spouses less likely to combine their efforts

Not only have principal farm operators switched out of farming as a main activity, but spouses and children appear to have moved to off-farm work as well. While the number of farming households (households in which at least one person is mainly employed in agriculture) fell, it fell less than overall employment in the industry (Chart I). As a result, the number of people mainly employed in agriculture per farming household dropped as well. In 1998, in every 100 farming households, about 143 people were mainly employed on the farm. By 2001, this number had dropped to 131.

Most of the drop was caused by fewer spouses combining their efforts on the farm (Chart J). In 1998, approximately 36% of farmers had a spouse who was also employed in agriculture, a figure that dropped to 27% by 2001. At the same time, the percentage of farmers with a spouse mainly employed off the farm climbed from 22% to 24%.

Lack of profit growth

So far this article has suggested that main-job farm employment is falling because farms are consolidating and mechanizing, because farm owners are accepting more non-farm employment and changing their main job from agriculture to something else, and because fewer spouses are combining their farming efforts. Are these trends a result of farmers being pushed out of farming, or is this group being pulled to more attractive opportunities in other areas? Probably the main 'pull' factor has been the very strong demand for workers in industries such as manufacturing and transportation where farmers can apply their skills.

One of the key 'push' factors could be that, in general, farmers have not seen an increase in profits since 1996 (Chart K). Farm operating expenses have risen to all-time highs, offsetting the modest gains in cash receipts. As a result, net farm income was $2.6 billion in 2000 (adjusted for inflation), about the same as in the previous three years and only a fraction of the $11.1 billion high set in 1975.

While some are undoubtedly being pushed off the farm by rising costs and low profits, farm bankruptcies have declined in recent years (Chart L). After hitting 471 in 1991, by 2001 the number of farms declaring bankruptcy was 271. Weak net incomes are not leading to more bankruptcies. Farmers appear to be coping with current economic conditions by making an orderly exit from the sector, or rebalancing their employment by switching their main job to something other than agriculture.

An aging field

One factor that is neither 'push' nor 'pull' is age. The median retirement age in agriculture is 66 (Chart M). Even though this is much higher than the overall median retirement age of 62, a much higher proportion of farmers are approaching or have surpassed the normal retirement age.

Summary

Farm size and farm labour productivity have undoubtedly increased, but probably not to an extent that would explain all the drop in farm employment. The other source of the decline is probably more second-job farm activity as farmers increased their hours of non-farm employment between 1999 and the end of 2001.

This likely move to more second-job farming has coincided with fewer spouses and children working on the farm as their main job. So, while fewer and fewer households have at least one member employed on the farm as their main job, the number of farming couples mainly employed has also fallen sharply.

The factors driving falling farm employment as measured by the Labour Force Survey are complex. The decision to enter or leave farming is complicated but is likely a function of a number of 'push' and 'pull' factors, as well as a person's age. Employment opportunities in industries where farmers can easily apply their skills have grown in recent years, luring workers off the farm. Farm profits have remained unchanged (and historically low) for a number of years, perhaps forcing some into other work. Age may also be playing a part in the decision to leave farming as a main activity. Farmers as a group are relatively old, with a large proportion approaching retirement age in an occupation that is often dangerous and physically demanding.

Geoff Bowlby is with the Labour Statistics Division. He can be reached at (613) 951-3325 or geoff.bowlby@statcan.gc.ca.

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© Statistics Canada - Conditions of  use Published: 2002 02 22