By Joy Gregory
Generations of Canadian farmers have used off-farm income to cushion their operations from the hard knocks of crop failures, commodity price drops, and interest rate bumps. But with more than 60 cents of every dollar a farm family earns now coming from off-farm work, ag insiders say it makes sense to take a closer look at what additional revenue streams can mean for farms and the families who run them.
Eric Gray knows what off-farm income did for him. After finishing high school in 1999, he became a journeyman ag mechanic. Eric had wanted to farm, but his dad, Richard, had rented out his second-generation land near Indian Head, SK, to pursue an education that would eventually see him employed as a professor of ag economics at the University of Saskatchewan. With commodity prices low, Richard’s message to Eric was clear: go do something else.
So, Eric became a mechanic and, eight years later, used that “something else” income to rent his parents’ land and buy his first piece of farm machinery, a high-clearance sprayer that, through custom work, generated cash for his own farm. Fast forward another 16 years and Eric and his wife, Randi, an educational assistant at the local school, own about half of the 3,400 acres they farm. They also operate a successful spraying company and run FenderXTender, a company that makes fenders for high-clearance sprayers.
“If he’d been born in a different decade, it might not have worked at all,” says Richard of his son’s success, which benefited from a welcome kick in grain prices that started in 2008.
As for the value of a diversified income stream, “I think every farmer understands this well,” says Richard. He remembers his own parents seeking off-farm work in the early 1970s. “My mother went back to work at the bank and my father started teaching extension classes again. That was just to help pay the bills.”
Off-farm income still matters
Statistics Canada data shows that by 2019, off-farm income equaled 64.4 cents of every dollar a farm family earns, including pension and investment income.
“Off-farm income is something we consider in our lending decisions because it supports the farm operation,” says Des Sobool, principal economist with Farm Credit Canada. “It’s another piece of the financial puzzle.”
Since farmers take a pragmatic approach to business, off-farm revenue is often generated by businesses linked to agriculture, notes Sobool. This includes custom work like hauling, seeding, spraying and harvesting.
Farmers also recognize local opportunities. “There is a strong reliance on oil and gas sector income, especially on the Prairies,” adds Sobool, noting that energy sector wages average twice the rate paid by other industries in those provinces.
To Richard, it’s about strategic planning. With more dual wage earners in the farm unit, he wonders if the term “off-farm income” has run its course. Statistics Canada doesn’t show who earns what on a farm, so is income just income, period? “I think it’s household income,” he says. “Some farmers don’t distinguish between the pieces, and I don’t think there’s a problem with that.”
Lydia Carpenter agrees. She and her husband, Wian Prinsloo, run a beef and layer hen farm near Pelican Lake, MB. They used non-farm income to launch their direct marketing ag business in 2010, eventually buying a quarter of land to augment rented land.
Prinsloo is from South Africa and Carpenter grew up in Winnipeg. As first-generation farmers, off-farm income anchored their agricultural start-up. “We got to the point where the farm business needed our labour, so we didn’t work off the farm between about 2013 and 2021. We invested all of our time and energy into the farm as a business,” says Carpenter, who holds a master’s degree in natural resource management from the University of Manitoba.
With an eye on stability and expansion, she now works for a company that specializes in the communications and conflict resolution side of succession planning. She also does contract work for Young Agrarians, a farmer-to-farmer network that advises young producers. That work, and her pursuit of post-graduate studies, means contracting of a different kind. “There are tasks in our home that I outsource so that I can pursue work and education,” says Carpenter.
But don’t confuse these off-farm interests with a lack of commitment to the farm. Carpenter runs the direct marketing side of their business and is the first to put up her hand for certain on-farm tasks, especially if they involve moving cattle, which she enjoys.
Richard suspects strong commodity markets will help some Prairie producers focus on on-farm work because the operation can afford to buy their time.
But three years into a global health pandemic that gutted national labour markets, the need to pay someone to do on-farm work because a farm family member works off-farm can be a sticky topic, particularly when multiple generations work together.
Still, Sobool says it might not make sense to keep all farm family members at home. While some producers might automate to cut labour, others may pay more for labour knowing farm family members are capitalizing on rising wages in the off-farm labour pool.
Farm labour is a major consideration at Eric’s farm. With FenderXTender and the spray business, he keeps one employee working year-round.
Richard says a trend towards increased post-secondary education and training bodes well for the farm economy. “You can think of that as another sort of backstop,” he says. “As their farms grow in size, parents are seeing value in their children learning more about agronomy or business.”
Back at Indian Head, Eric says two of his three young kids show signs of following him into the ag business. To make that work, he’s thinking ahead. Eric holds the Canadian and U.S. patents for the FenderXTender and while the Canadian business is steady, the U.S. market is ripe for expansion.
Thinking strategically, just like his professorial father taught him, Eric says he thinks the market expansion would be a good retirement gig. Now he just has to sell that idea to his dad.