The Rural Voice, 1982-10, Page 9GUEST COLUMN
The more we produce, the Tess we get
by Brenda McIntosh
Brenda McIntosh, executive director on
the Huron County Federation of Agricul-
ture, is also a member of the Farm Credit
Corporation Advisory Board. She lives
with her husband Jim on a farm west of
Seaforth and they have been involved in
the chicken and egg business for twenty-
one years.
Following are excerpts from a speech
she gave recently to a Women's Institute
group.
New concepts are popping up all the
time for farmers, and if they want to stay
in business, they can't just sit back, and
do everything the old way, just because it
has always been done that way. The
modern farmer must take advantage of
new technology as it becomes available.
I look on farming as an industry. All of
the same principles of business must apply
to agriculture if it is to survive. Planning,
supply, production, labour, markets,
credit, cash flows all enter into the
business of farming.
Planning is the most important and
difficult for farmers because of the
uncertainty of weather besides the other
hazzards of uncertain markets and chan-
ging government regulations. Sometimes
planning is one huge guessing game. The
farmer and businessman's strategy is
based on his expectations as to inflation;
future interest rates and markets have an
enormous bearing on the success of his
farming operations.
You have all heard of the industrial
revolution in the 1800's. There was a
tremendous increase in productivity
through steam and industrialists capita-
lized on this revolution. Unorganized
labour was exploited for 100 years. Then
labour organized and balanced the pic-
ture.
The industrial revolution took 100
years !o get into agriculture with electri-
city and gas tractors. Productivity in-
creased 20 times. But did farmers reap the
benefits of this increased production? Not
likely. The farmer moved his product as
far as his farm gate and someone else
marketed it. The farmer's answer to low
prices was to produce more. To grow two
ears of corn or two blades of grass where
only one grew before. He put out 2 cans
of milk Then 4 cans of milk and got the
price of 2; then 8 cans of milk, and got the
price of 4. Then 16 cans of milk, and got
the price of 8.
So the farmer's productivity has worked
against him. The more we produce, the
less we get.
Most of us know about the "cheap
food" policy in Canada. The farmer
has not benefited by this, but the
consumer has. Another term for cheap
food is the agricultural treadmill. The
single farmer operates in a market so
large, that he can have no influence on it.
In this situation, the farmer must take as
given to him the prices generated in the
market.
Confronted by this situation, he rea-
sons "1 can't influence price, but I can
influence my own costs. I can get my costs
down". So the typical farmer is always
searching for some way to get his costs
down. Built into the market organization
of agriculture, then is a powerful incen-
tive for adopting new technologies. The
incentive of reducing costs on the
individual farm. However, another factor
enters here, a little too much in the way of
total output relative to demand, and the
price is driven down. The conclusion of
this little lesson is that cost reductions in
agriculture are quickly passed on to
consumers by way of price reduction.
The farmers' productivity has worked
against us: the more we produce, the less
we get in returns. Obviously there is
something wrong here.
Farmers first tried to correct the situation
they found themselves in, by forming
co-operatives. They thought they could
obtain a better price in the market place
by bargaining through co-operatives with
the large buyers of their products. But this
did not happen just the way it was hoped
because co-operative associations rarely
include all producers of a product. It
cannot control production or make
non-members wait. Co-operatives were
more successful in reducing marketing
costs than in raising prices. Without
complete control of supply, co-operatives
were not in a strong position to exercise
great bargaining power in the market
place.
Farmers began to work toward the idea
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THE RURAL VOICE / OCTOBER 1982 PG 9