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Viewed from the highway, farming might look like a slow-moving business, but in reality it is in a constant state of flux. The types of commodities farmers produce and the methods and technologies they use change every year.

What does not change much are the long-term economic and social pressures bearing on agriculture: declining commodity prices, increasing mechanization and a growing number of larger enterprises as farms are consolidated.

Commodity prices fluctuate with supply and demand. But beyond the short-term ups and downs, prices for most commodities have been in long-term decline. For example, despite short-term price surges in 1988/1989 and 1995/1996, the price of grains in Canada has declined over 40% from the start of 1984 to the end of 2004.

Fewer farms, fewer farmers

Chart: Farm product price indexThese economic pressures have also driven the trend toward fewer, larger farms. Canada has roughly as much land devoted to agriculture as in the past, but fewer farms. In fact, the number of farms peaked in 1941 and has been declining ever since. The average farm size was 96 hectares in 1941; by 2001, it was 273 hectares.

Slimmer profit margins have pushed farmers to be more competitive and have accelerated the drive to adopt more mechanization, advanced breeding methods and new management techniques. For example, in 2001, one million dairy cows produced more than 30 billion glasses of milk (about 7.6 billion litres). There were half as many dairy cows in 2001 as in 1976, but the herd produced 10.6% more milk than in 1976. Similarly, pigs and chickens now grow to maturity faster than ever. Crop yields have also improved as a result of new, higher-yielding varieties.

The value of farmland has been on the rise, increasing in constant dollars from $17 an acre in 1941 to $100 an acre in 1971 and to $862 an acre in 2001. Even when accounting for inflation, this is a large increase in price. In 2004, the average per acre price of farmland in Eastern Canada was $2,671, more than four times higher than the average of $632 an acre in Western Canada.

If "fewer farms, larger farms" is a trend throughout Canadian agriculture, it's particularly dramatic in the poultry sector. The number of poultry farms declined from nearly 8,700 in 1981 to just over 4,900 in 2001. However, the number of birds reported on these farms rose from 89.1 million in 1981 to 123.6 million in 2001. That's 39% more birds living on 43% fewer poultry farms.

In addition to the fewer-but-larger trend, the poultry sector is becoming more and more vertically integrated. In other words, one firm often controls several stages in the production process, from hatcheries to processing poultry meat and eggs.

Rural demographics changing

Chart: Average area of land per farmFewer farms mean fewer farmers, and those who are left in farming tend to be older. The median age of a Canadian farm operator in 2001 was 49, compared with 47 in 1996.

In 2001, some 32,500 operators of Canadian farms were foreign-born, comprising 9.4% of total farm operators. The Netherlands, the United Kingdom, Germany, the United States, Switzerland and India were the top six places of origin for immigrant farmers according to the 2001 Census.

The declining number of farmers is also having an effect on rural communities where agriculture is a key industry, especially on the Prairies. Shrinking farm populations and the disappearance of local or country grain elevators have caused other businesses to dry up, causing small towns to suffer. The number of Prairie elevators in 2002 fell to 412, from 3,117 in 1981.

Farm income statistics illustrate how the situation in different agriculture markets can vary greatly. At any particular time, some markets are more profitable or stable than others. The health of agricultural markets can change due to a variety of factors such as changes in international trade and competition, weather, and consumer demand.

For some farm enterprises-such as cattle, hogs and greenhouse vegetables-free trade with the United States and other countries has brought opportunities to expand into large new markets. But a change in trading conditions can be devastating, as was demonstrated when the Canadian border was closed to exports of live cattle in the spring of 2003, after the first of three Canadian cases of bovine spongiform encephalopathy (BSE) was found.

Changing weather, shifting demand

Chart: Farm cash receipts, by province, 2004Weather is another fickle variable. Serious droughts on the Prairies contributed to severe declines in wheat production in 2001 and 2002. The average yield of wheat in the Prairie provinces fell to 1,700 kilograms per hectare in 2002, the lowest yield in over a decade.

Changes in consumer demand have also brought about shifts in what is grown. An interest in international cuisine has been triggered by Canada's diverse population, as well as by export demand. As a result, farmers have been growing a wider range of vegetables. Some vegetable and herb crops, such as oriental vegetables, saw double-digit increases in area planted during the 1990s.

Some products have increased in popularity due to the presence of niche markets. Lentil production, due both to increased domestic demand and a strong export market, climbed to 1,277,900 tonnes in 2005 from 38,900 tonnes in 1984. The value of Canadian-grown ginseng, which is used as a medicinal herb, reached $62.3 million in 2003, compared with $2.8 million in 1980.