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Before him, Bob's grandfather was a dairy farmer, his father in beef. Then, in the mid-1970s, the Harts got out of livestock and turned to cash cropping. That decision left them with a large, well-built barn standing empty and plenty of time on their hands, apart from spring and fall. "It just seemed natural to start seed cleaning, and from there it was a short step to producing certified seed and selling it."
Now, with the exception of some corn, Hart grows wheat and soybeans for seed. Much of it is sold through his company, Agworks, but he also grows on contract for a number of seed companies. Since demand exceeds his ability to produce, he contracts with neighbouring growers, who buy their seed input from Agworks, are responsible for planting, managing and harvesting the crop, and who then sell it back to Agworks at an agreed premium over a base price.
Hartholm Farms is thus a classic example of an integrated operation, with seed planted cultivated, harvested, processed and finally sold through a single organization. Four years ago, Agworks took vertical integration a step further by joining with other five other Ontario seed producers to form a new company, Pro Business, which has now licensed its own exclusive varieties of soybeans from public and private plant breeding institutions.
Such a wide mix of crops enables DeLanghe to weather temporary price fluctuations. "This year, cherries were good. Volume and quantity was excellent and we turned a profit. Five years ago, the sour cherry business was terrible - at three and a half cents a pound, it's hard to cover costs. On 300 tonnes, being able to get 35 cents a pound makes a big difference."
DeLanghe does not just grow and sell - he also processes what he can sell at his farm market, shipping the rest to industrial processors. Little is left to chance. "We are very hard on our land, and when you're taking a lot out, you have to put it back." He irrigates heavily, uses a lot of trace elements, fertilizes through the soil and through the trees and conducts a series of leaf analyses. "That's important because, unless you are careful, you'll end up growing trees instead of fruit."
An operation like DeLanghe's is not cheap to run. "I have two fruit sprayers at $40,000 each, cherry and tomato pickers (ED: he didn't mention tomatoes in the list above. Can tomato pickers be used for other things?), and then there is the processing equipment."
That requires continuing access to capital. "We borrow money, we pay it back and borrow it again. An operation like this frightens a lot of people. Some of my grain-growing friends look at me, shake their heads and ask, 'Is he making money?' Well, we're not making money in the way a regular investor would look at it, returning five or six percent on the capital, but we are accumulating value. You have to make your farm payments, and we do. If you continue to do so, and we have for 40 years, then you get to the point where you have equity in the operation."
How do Hart and DeLanghe see the future for cash crop farming? Hart is guardedly optimistic. "Ontario cash croppers can compete with anyone if subsidies are equal," he affirms. While waiting for that happy day to dawn, he sees opportunities coming in "preserved identity" produce. "That means being able to prove to the buyer that what you grew and what you are delivering is in fact what you promised. That means certified seed, clean combines, drills and discs as well as planting varieties with the qualities buyers need. It also means growing the correct varieties for a specific market. A corn grower producing genetically modified organism (GMO) and non-GMO hybrids must be able to prove that they have been kept separate."
DeLanghe is less positive about the future, particularly regarding subsidies. "We have to get a safety-net system that is equal to our competitors', "he says. He expects to see fewer farms in fewer hands, but doubts that giant agri-businesses will move in and take over the family farm altogether.
"I've thought about that a lot and don't think it will happen. In the farmers themselves, agriculture has the cheapest managers running its operations, and the best. At seeding and harvest, they push themselves to the limit, and the family pitches in as well. That's the strength of the family farm and something the Monsantos and DuPonts don't have."
Both see the key to success in keeping the buyer happy and protecting their market. "Any time a university or agricultural college builds a new wing for crop production," says DeLanghe, "they should be building a wing that helps answers the question of how that crop is going to be sold."
Many cash croppers would say "Amen" to that.
"Cash crop growers are not in the front end of this move because Mother Nature plays such a large part in production, and because the consumer, the ultimate arbiter, is removed from the grain growing process," Reesor says.
It is all changing, and paradoxically the debate between genetically modified organisms (GMO) and non-GMO crops is driving the change. Mike Snobelen of Snobelen Farms in Ripley is a major exporter of food grade soybeans. The bulk of his trade is with European soymilk makers. Soon, he hopes to begin shipping to bakers who will use soybean flour.
"This trade is driven by the consumer," says Snobelen, and it is influencing the growing activities of 750 independent farmers in Huron and Bruce Counties.
Growers who sign a contract with Snobelen have to agree to stringent conditions:
In return the grower has a guaranteed market for his crop and a 40-cent a bushel premium over regular prices.
Producing to these standards is demanding, and the use of custom operators for much of the work can help ensure freedom from contamination. Snobelen, who farms 2,100 acres himself, does no combining; he uses custom operators who can devote machinery to non-GMO crops and help maintain the required standards.
This is just the tip of what can become a very large export business. As the GMO versus non-GMO debate heats up in Europe, livestock producers in the European Community are beginning to insist on meal guaranteed free of GMO grains. "That,"says Snobelen, "is an immense market. Non-biotech soymeal will be a major part of such feedstuffs." BS
U.S. economists studying this phenomenon argue that this aspect of modern agriculture is really about a change in its structure, much of it consumer- and technology-driven. In the old agriculture, a large number of buyers and sellers traded homogeneous commodities on an open market. In the new agriculture, there's a shift from spot markets for a commodity to direct contracts between livestock growers and processors. In the industrialization process, farms become larger, and more specialized. Livestock raisers change how they do business. They buy feed instead of growing it, or hire labour instead of providing it themselves.
Contracting and large-scale farming go hand in hand. In 1988, giant U.S. piggeries marketing at least 50,000 animals a year accounted for seven per cent of all pigs marketed. Nine years later, they accounted for one third of all hog marketings in the United States. Between 1970 and 1990, the market share of hog producers under contract or in vertically integrated operations expanded from two to 21 percent and has grown exponentially since then.
The effect of contracting on the cattle industry, still mostly a commodity market, is less clear. Large feedlots marketing at least 16,000 head a year (ED: in what year?) sold less than 20 per cent of the fed heifers and steers in the United States. Now large feeders sell more than half of the 28 to 29 million fed cattle sold annually.
In general, studies by the U.S. Department of Agriculture's Economic Research Service show industrialized agriculture gaining ground. A 1993 survey, for example, reports that the 11 per cent of farms using contracts generated 40 per cent of total farm sales while the 89 per cent of farms performing business on cash sales go the rest.
There are two different types of contracts -- production contracts and marketing contracts. In 1993, the 10 per cent of American farms planting 15 per cent of the acres devoted to marketing contracts attracted about 28 per cent of U.S. gross farm sales.
By comparison, farms working the five per cent of acres devoted to production contracts earned about 15 per cent of farm gate sales. Production contract farms averaged annual sales of $485,000, about 10 times as much as farms with cash only sales.
Nearly half of them were poultry farms on very small acreages. And here's the rub.
The USDA touts the broiler industry as the epitome of contracting efficiency. It says there are 25,000 broiler producers in the United States, raising 56 per cent more meat than the nation's 115,000 hog farmers and nearly as much as 856,000 cattle producers. Moreover, broiler production has soared in recent years, growing 142 per cent since 1980, while pork and beef production grew by a less than three per cent each. The difference is that most producers aren't able to make a full-time living in this highly efficient industry,
The other downside of the industrialization phenomenon, the USDA admits, is that, at its largest scale, it sometimes overwhelms environmental controls, creates new stresses on local public services, and changes rural communities.
January 1, 2000
A tale of two farms: integration at work
by BRIAN SLEMMING & DON STONEMAN
As we move into a new millennium, people in all walks of life are asking themselves what the future will bring and what changes are just around the corner. Agriculture, long largely impervious to change, is among the industries changing most rapidly and drastically. In the process, many labels and definitions are changing as well.
Take the part-time farmer, for instance. Bob Hart of Hartholm Farms, north of Woodstock, farms 1,800 acres, provides contract services for another 600 and grows soybeans and wheat under contract with 16 neighbouring growers. Sounds like a full-time business, so why does he consider himself a part-time farmer? Because he is also in the seed cleaning and production business. "It now takes more of our time than the farm does," he says.
Hector DeLanghe of Blenheim runs an integrated operation of a different sort. He has built the 50 acres he bought from his father 45 years ago into a 500-acre mixed cash crop and fruit business. He has 200 acres in fruit (sweet and sour cherries, apples, peaches, pears, nectarines, apricots and strawberries) and 300 acres in corn, beans and wheat ("which gives me straw for the berries"). A further 30 acres is rented out to a local corn seed producer.
The trend toward involvement of agri-business, predominately feed producers, is now well established in poultry and hog production. That of major input providers (chemical, pesticide or seed producers) in cash cropping has been slower to develop. Nevertheless, the signs are starting to appear, according to Colin Reesor, a commodities specialist with the Ontario Ministry of Agriculture and Food and Rural Affairs (OMAFRA).
* They must purchase their seed from Snobelen.
* They must sign an agreement that they will not plant any Roundup Ready or other GMO seed.
* They must file a field map with Snobelen.
* They must agree to allow field inspections by Snobelen staff.
* They must allow for small patches to be sprayed with Roundup to guarantee the crop is free of the Roundup Ready genetic material.
* They must agree to allow a series of samples to be taken of the harvested product to check for purity.
Defining the industrialization of agriculture
by Don Stoneman
Rightly or wrongly, the industrialization of agriculture is regarded with suspicion. But what does it really mean?