Farms pivot to guard finances during COVID

Farms have been forced to make changes, with varying levels of success

Agri-food Management Excellence (AME) is looking to the experiences of graduates of its CTEAM (Canadian Total Excellence in Agricultural Management) program to better understand the effects of the COVID-19 pandemic on the sector’s finances.

Norfolk County cash crop and horticulture producer Brett Schuyler, Staffa-area sheep farmer Sandi Brock, and Oxford County goat dairy producer Cheryl Haskett (her husband Greg is a CTEAM graduate) were all case study subjects cited by AME principal partner Larry Martin on March 7 as he addressed how the Canadian economy could recover from COVID-19 shocks.

Key indicators – gross domestic product, trade balance, the value of the dollar, price of oil and employment – all followed similar trajectories, plummeting in March and April of 2020, recovering considerably prior to the pandemic’s “second wave” late last year, followed by another significant recovery through early 2021.

As confidence has grown that things are going to get better, he said there has been an increased willingness among investors to hold currencies – such as the Australian or Canadian dollars – from resource-dependent economies.

Canada recorded its first monthly trade surplus since 2019 in January 2021, and the largest surplus since 2014, which shows there’s no question the economy is far outstripping the dire prognostications of March and April.

China’s post-COVID recovery also happened more quickly than anticipated, pushing oil demand higher than predicted. 

“Bottom line is, we’ve gotten better,” Martin said. “But not where we were before the pandemic started.”

Diverse markets helped agriculture

Specific to agriculture, one of the biggest lessons from COVID-19 was the diversity of marketing models among the nation’s farms. Wheat producers saw minimal effects because there remains a diversity of processors in Canada, he said, meaning sellers had options whenever an outbreak affected intake for a particular buyer.

Other commodity crop producers saw initial bottlenecks and blocked distribution channels, but these re-opened fairly quickly in response to the ripple effects of China’s rebuilding of its African swine fever-ravaged swine herd.

There were significant short-term effects for supply managed sectors from food processor outbreaks and an overnight transition from food-service to cooking-at-home consumption. Some of those effects, particularly for chicken, remain, but “my impression is that many of those issues have been addressed, at least for now.”

Lingering processing-plant repercussions remain serious concerns for the red meat sectors. And this is exacerbated by rising prices for feed grains.

“Margins are really squeezed and there has been way more volatility in prices than there was before (the pandemic),” Martin said of Canada’s beef sector. “Volatility has just been ridiculous in the last little while.”

But almost certainly the hardest-hit sector, Martin argued, has been horticulture. And it’s not due to supply chain bottlenecks or consumer preference shifts, but rather to an extreme scarcity of workers due to travel restrictions.

Martin cited his recent conversations with Schuyler, who endured a high-profile dispute with his region’s Medical Officer of Health through much of 2020, in declaring that COVID-related “labour issues have been ruinous” to many in the horticulture industry.

A recently-completed AME case study about Schuyler Farms explains the business would typically have brought in about 190 workers from Trinidad and Tobago for apple harvest, with many of them arriving earlier for spring-time pruning and spraying. But travel restrictions forced the family to instead use a much smaller number of Jamaican citizens who were employed by another farm recently purchased by the Schuylers. These workers required significant training.

Things got worse, Martin said, when “their local Medical Officer of Health started making some irrational moves.” Fearing repercussions, workers with symptoms decided not to declare they were ill and instead kept working alongside their counterparts. Large-scale – and widely-reported – outbreaks resulted.

“Because of that, Brett was subjected to a lot of opinions from the public – most of which were completely wrong,” said Martin.

Changes to the Temporary Foreign Workers Program under the spectre of COVID-19 was the top “opportunity for advocacy” put forward by Martin at the conclusion of his talk. “I’m not blaming the people who started it,” he said. 

But he likened it to the sometimes-controversial, federal government-financed CERB program for people thrown out of work by the pandemic – in that it was “well-intentioned but not well thought out.” And he says it’s crucial some changes get made quickly as fruit and vegetable producers head into spring 2021 wondering how they’ll get the work done this year.

Farms find success in COVID pivots

But Martin’s recent virtual visits to a number of other Canadian farms showed less uncertainty than his discussions with Schuyler. He outlined four recent tours highlighting post-COVID “pivots” in the agriculture sector – two of which were hosted on Ontario farms.

Brock, at her Shepherd Creek Farm, “has turned social media into a profit centre,” Martin said. “She’s basically selling a farm experience” that an outdoors-starved, city-dwelling public has been happy to consume as the pandemic wears on.

Haskett, meanwhile, saw her farm’s goat milk ice cream marketing strategy “whacked” by COVID-19 because it eliminated their plans for wide-scale taste-testing booths in the Sobey’s stores. Martin praised her, though, for quickly developing new relationships with small-scale retailers as far afield as Saskatchewan for the farm’s Udderly Ridiculous line of ice cream.

Persistently-low interest rates in the wake of COVID-19 mean “it’s clearly a great time to consolidate loans, or maybe a time to take on more debt.” Martin cautioned, however, that debt should only be increased if a business is sure it has the income-generating capacity to keep up with the interest payments.

About the author

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Stew Slater

Stew Slater operates a small dairy farm on 150 acres near St. Marys, Ont., and has been writing about rural and agricultural issues since 1999.

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