Will Chen (00:04):
In their definition, a Census farm is defined as a farm which intend to sell its farm product. For example, if you own half acre of land and you intend to sell product from your land, you're considered as a farmer and operate a farm for the Census.

Graeme Li (00:24):
You're listening to The Why & How Podcast produced by the Ontario Agricultural College of the University of Guelph, where we look to answer big questions in agriculture, food, and the environment through casual conversations rooted in research.

Jordan Terpstra (00:40):
Hello everyone. My name is Jordan Terpstra, and you know me as the friend of the show for The Why & How Podcast. So I have some exciting and I guess some sad news today. I'll start with the sad news is that we no longer have Josh as our podcast host. Josh is onto bigger and better things, but luckily he has passed on the baton and I know Josh will be listening to this episode. So hi Josh. And so we very excitingly have a new podcast host and our new host is Graeme. So hey Graeme, how's it going today?

Graeme Li (01:11):
It's going well, Jordan.

Jordan Terpstra (01:12):
That's awesome. Why don't you give our listeners a little bit or tell our listeners a little bit about yourself.

Graeme Li (01:17):
I'm a first year Bachelor of Science in Agriculture student here at the OAC and found out about the opportunity. And now I'm excited. We have our first guest in the studio today. Will Chen is here with us.

Will Chen (01:29):
Hello everyone. My name is [inaudible 00:01:32] Chen. You can call me Will if you want. I am a research assistant at Department of Food Agricultural and Resource Economics. So I would like to give you a little bit about my current project. It's about a farm entry and exit. So the name is Dynamics of Farm Entry and Exit.

Jordan Terpstra (01:52):
Very cool. And so then you said you're a research associate?

Will Chen (01:56):
Assistant for now.

Jordan Terpstra (01:57):
Yeah. Okay. And so does that mean that you're a student as well?

Will Chen (02:00):
No, I graduated 2018.

Jordan Terpstra (02:02):
Okay.

Will Chen (02:03):
So I've gotten my master's degree from the department and then I sort of just keep on the project and it was at that from my master [inaudible 00:02:15] . We did a bit more additional analysis on it. So we're trying to publish a study or a journal paper.

Graeme Li (02:27):
Awesome. And so tell us about the project. What is it exactly about?

Will Chen (02:31):
I would say my project is about the whole picture of the farming community, the in and out, the entry and exit of the farm entry and exit. So I like to start off with several general trends. So there are several, the first is the total farm number is declining from the peak of more than 700,000 farms in 1941 to the current of less than 200,000 farms in 2016, a 74% drop from the peak numbers. While the second trend, I would say as the [inaudible 00:03:07] farming are disappearing at a faster rate than others. As a result, there is an increasing share of small/hobby farms and increasing share of large commercial farms.

Graeme Li (03:22):
So you mentioned earlier, farm entry and exits. What exactly are those?

Will Chen (03:28):
I would say the farm entry and exits are the ... So the entries are the one getting into sector and exit are the one getting out. But the important part to tell them apart is the definition, what definition we used to define a farm's entry and what we've used to define a farm's exit. So we have two important threshold for that. The first one is we have a unique farm census ID and the second one is we use a three-census rolling period to determine whether they are in or not.

Jordan Terpstra (04:15):
So are you talking about Canadian farms when you're talking about these numbers?

Will Chen (04:19):
Yes.

Jordan Terpstra (04:19):
Yes.

Will Chen (04:19):
Yes I am.

Graeme Li (04:20):
So for the purposes of your data, what is a farm?

Will Chen (04:23):
We use a definition that are you a [inaudible 00:04:26] statistic Canada. They have a definition of for the census of agriculture in their definition. A census farm is defined as a farm which intend to sell its farm product. For example, if you own half acre of land and that you in intend to sell the products grown on your land, you're considered as a farmer and operate a farm for the census.

Jordan Terpstra (04:50):
Very fascinating. I would ... I feel like if we were to ask even most farmers to define what a farm is, I bet a lot of them wouldn't think it would be that. And I find that interesting because we were actually just chatting before we started recording about that, if I had a chicken and I wanted to sell its eggs to my mom that could classify as a farm, right?

Will Chen (05:10):
Yes, correct. A hundred percent right.

Jordan Terpstra (05:13):
Very fascinating.

Graeme Li (05:14):
So for new farm entries, what does a new farmer typically look like today?

Will Chen (05:18):
I would say there's a lot of different characteristics associated with new farmers, but the common ones are they are small scale farmers and then they are located in a densely populated area and they are mostly part-time vegetable horticulture or maybe even poultry farmers.

Graeme Li (05:41):
And why not beef or dairy per se?

Will Chen (05:43):
Because the barrier for the new people to get in is fairly high in the dairy sector. In Canada, we have a quota system. So it's a supply management system. A farm can only produce if they have a quota. So that's in butter term in kilogram and then so for now in Ontario, if you want to get a production quota for a kilo of butter that costs $24,000, it's a huge amount of money. So the barrier for new people to get in is fairly high. And for beef, I think there's something to do with the knowledge of raising a beef, raising a cow. And then there's also the issues of land because you need a pasture for the cow to roam.

Graeme Li (06:44):
That makes sense. Could you talk a bit about the changing genders on farms today?

Will Chen (06:50):
Sure. I would like to share some insight on the genders in the farming communities. Although I would say male operators dominate all four farm types, but female operators are most likely to associate with entry farms that including entry-stay farm and entry active farm in our model.

Jordan Terpstra (07:14):
And so could you define those two terms that you just used?

Will Chen (07:16):
Sure. I would love to share more on the details about how we classify the farm into four farm types. In order for us to catch most of different farm types, we develop the three-census rolling period. And then so we have this previous census, current census and the next census period and then we compare their farm census ID to see whether that ID is in there or not.

Will Chen (07:50):
Let me give you an example. If the current census is 1996, so the previous census is 1991, the next census would be 2001. So in this three-census rolling period, if a farm is not in 1991 census but it is in the 1996 and 2001, we classify this farm as entry-stay farm because they have stayed in two census period already. We classify them as entry-stay. If a farm is not in 1991 census, but is in 1996 census and not in 2001, we classify them as entry-exit, because they're not in the first one, in the second one and they're also not in the third one. So if a farm is in 1991 census and 1996 census, but is not in 2001 census, we can classify them as an old-exit because they're in that two previous census. They're not in the last one. Apparently they have [inaudible 00:08:56] . So the last category is the continuing farm. If a farm is in 1991, 1996 and 2001, we classify them as a continuing farm because they are in the three census period.

Jordan Terpstra (09:11):
So if someone were to pass along their farm to another person, that doesn't necessarily mean it's a new entry because the farm still exists. Right? So it's just ... even if you were to ... if it was to go from a parent to a child or if for some reason I want to get my farm to Graeme, that wouldn't count as an entry. Correct?

Will Chen (09:32):
It depends.

Jordan Terpstra (09:33):
Okay.

Will Chen (09:33):
So let's say you want to pass the farm to Graeme, and then the farm ... so the basic of farm doesn't change, like the address, the operations doesn't change and then you'll receive the same number. However, if some major changes happen, like maybe Graeme like another place to live so they might move the other side of the farm. And then in that case the address changes and Graeme may like poultry farming than vegetable farming. So the operation change, that would classify as a new farm as well.

Jordan Terpstra (10:14):
Pretty cool.

Graeme Li (10:15):
So could we talk a bit about the age of the average farmer nowadays in Canada?

Will Chen (10:19):
Yeah, definitely. So for the average age, we do not have that because we only have age category. It's hard to [inaudible 00:10:29] the average age with age category. But what I can tell you is the entry-stay farm is definitely the youngest farming group in four farm groups. It was 24% of them younger than 35 and old-exit is the oldest in the four types. It was 50% of them are older than 55.

Graeme Li (10:54):
That makes sense. New farmers are young and old farmers have to retire at some point. Right?

Will Chen (10:59):
Yes.

Graeme Li (10:59):
And so are these new farmers successful?

Will Chen (11:02):
Well it depends. So from our dataset, we can tell 36% of entry-stay and 52% of entry-exit have sales under 10,000. So there is a quite a bit of new farms are not very successful in terms of sales and we also have the rate of survival. If a farm that can survive for more than five years, we'd call them as a survivor. So the survivor rate of entry farm is actually 50% across all provinces. So half of the farm left in five years. The failure rate is, I would say it's something we need to look into.

Jordan Terpstra (11:53):
Has that number changed through the years, that 50%, like say when you're looking at some of your earlier data was that a number of difference or has it been pretty consistent?

Will Chen (12:04):
It's been pretty consistent. It's always like around 50% and might jump a little bit, but it never deviates too much from 50%.

Jordan Terpstra (12:17):
Very interesting. And so then, would some of your research be looking at ways to try and increase those success rates or is 50% kind of where we want to be because we don't want to have too many farms, right, because then that would kind of ... if we had a 100% success rate of all new farms and there'd be so many farms and then that might affect the markets. Right? So do you know ... is there like a standard that is a goal to try and reach?

Will Chen (12:42):
Yeah, it's a great question. Actually it's one of our own questions since we have a quota of a farm that are new farms in every census, but half of them have failed in five years. So the question is, we know entry happens, but how do we retain them? It is the question that definitely needs more research on but for now I don't have the answer for that.

Jordan Terpstra (13:11):
But it's cool to know that the people are thinking about it and looking into that. Very interesting.

Graeme Li (13:16):
And so is it the same across all provinces?

Will Chen (13:19):
It's not the same, it's around 50%. For example, Quebec might have like 54, 56 and Ontario might have a little bit lower like 47, 48, but still around that 50% range. And then on the Western provinces are usually aligned with the Quebec as of the the survival rate.

Graeme Li (13:43):
All right. Let's switch gears a bit and talk about big farms. So there's an increase in big farms, correct?

Will Chen (13:49):
Yes, correct, 100%. So the number of large and commercial farming actually increased 300% in four decades. So we have 3000 large and commercial farming that are larger than 3,500 acres in 1976 but we have nine southern farms in 2016 in that category. So it's a 300% increase. It's an astonishing increase.

Graeme Li (14:18):
And so these big farms, just how big are they exactly?

Will Chen (14:21):
We're looking at the farms that are larger than 3,500 acres and larger, so it could be ... there's a lot of those big farms in the Western provinces, especially in the Saskatchewan. Some in Manitoba, some in Alberta, but it's rare, in term of share, it's rare in Ontario and Quebec.

Graeme Li (14:50):
Who needs quota when you have 3,500 acres, right?

Will Chen (14:53):
You're right.

Jordan Terpstra (14:54):
And so does that only ... like that kind of number, it only looks at the land, right? So it's not looking at say like a poultry farm. You're not looking at how many barns they have or how many animals. It's based on just the amount of land?

Will Chen (15:09):
Yes, correct. We're only looking at the land sites. So I think there's another reason for those big farms, predominantly in the Western provinces, because there's a considerate amount of farmers are in cash crop farming in the Western provinces, so it's easier to scale up on land sites and then just keep doing what they're doing before.

Graeme Li (15:40):
And do you think these big farms are a good thing or a bad thing or just a thing?

Will Chen (15:44):
Well, I had to say it's a trend. There's two trends happening in the agriculture right now. One is a small/hobby farming. They produce a local/organic product for their neighborhood. And there's also, there's big commodity farmers. They are produce product for the ... I would say either the world market or across the North America.

Jordan Terpstra (16:13):
Very interesting. And so then one of the trends that you mentioned earlier was that those middle-sized farms are decreasing, right? So we're seeing people, they're either increasing and going huge or there's people that probably have other source of income and then have these hobby farms on the side, right?

Will Chen (16:27):
Yes, yes. The middle-sized farm have decreased a lot. They owned it for a decade period. And then I think one thing is there's a portion of the middle-sized farm have actually grown bigger into those large and commercial farming and some might just retired and then yeah, that could be the results of the disappearing of middle-sized farming.

Graeme Li (16:56):
And so I have a professor in my economics class and a doctor and he always talks about how farms have to grow bigger because profit margins are shrinking. And do you think this is exactly what he's talking about?

Will Chen (17:10):
Yeah, I think it's definitely correct. The profit margin for farming is definitely decreasing. If you see the farm product price at farm gate, it's just keep declining over the years. The share of processing and in transportation just keep growing as a share. So in the end, when we as a consumer, are not exactly paying a cheaper price for our [inaudible 00:17:41] because of the growing share of processing and transportation and there's a lot of cost goes into it and as a result the farmers got to squeeze and we end up paying a higher price sometimes. I would say like the reason why the large scale farming is getting a lot more popular and increasing is the survival of those firms. Like if you see the prices going down, the only way to survive in this industry is to scale up. When you have a lot more product to sell, you can take a little bit ahead on the profit while the other small and mid-sized farmer are hard to get by the low prices. So there are definitely hurting by the low farm prices.

Graeme Li (18:36):
That's interesting. I'm wondering if these bigger farms are also taking care of the land per se as well as a mid-sized farmer would.

Will Chen (18:46):
That's a question we actually doesn't look into whether do they take care of land or not. But I think if you want your business to sustain growth or maybe just survive in the farming community, you kind of need to care about your soil, constantly increasing your soil quality in that term. You will have a better yield hopefully the next year when you'll take care of your soil.

Graeme Li (19:22):
So how are all these trends affecting land value around Canada?

Will Chen (19:27):
I would say these trends definitely have effect on land value. And so for now the trend is going up for the land value. There are several reason goes through that. So the new people want to get into farming, they want a piece of land, might not be bigger, but there's still a piece of land. And then there is some mid-sized farming wanting to go into commercial farming. They want to expand. So the demand for the land is, I would say, is not decreasing at this point, but the supply for land is finite. We only have so much land. When you have a finite supply, but you have a sort of increasing demand, the price will go up as the result.

Jordan Terpstra (20:18):
And I think I can speak for all of us when ... We definitely feel that, especially when we're in Guelph and other areas you've definitely noticed even in the past 10 years, just the talks of how more expensive land is becoming and especially when you have to factor in homes as well, right, and taking like does that farmland continue to be used as farmland or is it being used to build homes?

Will Chen (20:43):
Yeah, you're right.

Graeme Li (20:45):
And so do you know if this is just a Canadian trend or if globally this is happening all over the world?

Will Chen (20:50):
Well, I think, I personally think it's a global trend. It's happening in the United States, it's happening in China and a lot of other places. We can see commercial farming has become more and more common across the world. That's just the way how the world progress itself.

Graeme Li (21:13):
So for farmers leaving the industry, what are they doing with their land?

Will Chen (21:17):
I have to say they probably want to sell their land. We don't have that data, but we have the land they own as a ... Well we have the land owned by the old-exit versus continuing farm. We can see the comparison there. So I would think, I would say the old-exit are definitely scaling down their operations compared to the 678 acres of land owned by the continuing farm. Old-exit farm only own 368 acres, only 55% of the land owned by the continuing farm.

Jordan Terpstra (22:02):
So how many farms, like on a percentage are you seeing actually exits?

Will Chen (22:06):
For the farm that are exiting I would say once and for all because they're old-exit, that's about a quarter of the older farms. So around the same number as new entrance. So that's same around people getting in. There's the other side of people getting out.

Jordan Terpstra (22:28):
Well that's good. So it's kind of balancing it out a bit. Do you know like ... I mean I'm sure we could definitely guess, but do you have any data as to why people exit farms?

Will Chen (22:38):
There's no data on that by the Statistic Canada, but I could guess several reasons like maybe retirement, when the farmer gets around maybe seventies 75 they might want to have a quieter life. Since the farming is quite intense sometimes, they might want to scaling down and then pass their land and farm to the next generation. So retirement could be one of the reasons.

Jordan Terpstra (23:12):
Very interesting. And so I'm curious too actually, when it comes to hobby farms, do you know how many percentage of hobby farms actually continue? I would think there'd be more of a trend of one family or one generation might have a hobby farm and then it might kind of exit after that. Do you have any comments on those types of trends with hobby farms?

Will Chen (23:30):
We actually don't have that. But what we have is how likely they are to be new entries for those hobby farms. If we say the hobby farm are the farm's own land undertakers, then they're very likely to be a new entrance versus old-exits and continuing. So actually a lot of those hobby farms are new entrance, but like I said, 50% of them failed in five years and then we are actually trying to look at the survival of all the farms. So in the future we might have a research on the survival of farms, a complete survival analysis on those farms, see how many years they would survive after getting into farming and then what are the factor that will affect their operations and then how those factor will affect their decision to either staying or exit.

Jordan Terpstra (24:43):
Very cool. So you said that'll be some research for the future.

Will Chen (24:47):
Yes.

Jordan Terpstra (24:47):
Very neat.

Graeme Li (24:48):
So I was wondering how did you actually end up getting to this place? How did you end up doing this research?

Will Chen (24:54):
So I was actually working in a bank in Beijing before I came here. And then I guess the career in banking doesn't really, well I would say I couldn't really advance in the banking without a master's degree. So I decided to come to Canada and then do a degree in, well it happens to be agriculture economics and then I like it. So I was pretty lucky that Dr. [inaudible 00:25:33] took me in and then I've got this project. I found it's pretty fascinating, all the ... so who was the new farmer who's trying to get in, who's trying to get out and then that just ... because I'm more interested in the business side of the farming as well. Yeah, that's probably about my background. And then I would say in the future if the [inaudible 00:25:59] allow, I definitely like to continue to research probably the survival analysis. And then if you like my podcast, please stay tuned with us.

Jordan Terpstra (26:12):
Very cool. Very cool. And so how many years have you been in Canada then?

Will Chen (26:16):
I have been here for five years now. I came here to study English in 2015 and I did that in four months. So they just give me the certificate and then I applied for that fair department. They took me in. I think, "Okay. This is good place to start."

Jordan Terpstra (26:39):
Very cool. And so how have you enjoyed living in Canada?

Will Chen (26:42):
Yeah, I like it a lot. It's pretty good, I guess especially the driving. Well I like driving. I like to drive around so I guess Canada just fits me better.

Jordan Terpstra (26:56):
Very cool. Yeah, lots of space to roam for sure.

Graeme Li (26:58):
And so what are your next steps for the research?

Will Chen (27:01):
My next step will be keep going on the survival analysis, trying to publish this one and then if that opportunity is not allowed, I probably will just try to find a job in the private sector, probably in data analysis or some other related jobs. But I definitely love to continue in the research.

Jordan Terpstra (27:25):
Very cool. And has this exposure to the agriculture side of things, do you enjoy the agriculture side or are you more of just a numbers guy and so as long as you're working with business and economics you'll be happy?

Will Chen (27:36):
Oh, I'm definitely enjoying the agriculture side because when I used to learn, I guess [inaudible 00:27:43], it's very useful for you to have a major that focus on other than [inaudible 00:27:51] because [inaudible 00:27:51] the numbers and province stuff. But you also need to know what's going on there, what's happening in the other industry for you to have a better understanding of how to better the research on either their company or stock or whatever.

Jordan Terpstra (28:11):
Right. Absolutely.

Graeme Li (28:13):
All right, well thank you very much for coming on. Is there any shout outs you want to give before we end?

Will Chen (28:18):
I think this program is great and then I'm very enjoying the time with Graeme and then thank you for listening.

Graeme Li (28:27):
Perfect. Thank you very much.

Jordan Terpstra (28:28):
Well Graeme, I think we survived our first podcast together so that's exciting and so thanks everyone for listening and thanks for joining us.

Will Chen (28:35):
Thanks so much.

Jordan Terpstra (28:36):
Perfect.

Graeme Li (28:39):
The Why & How Podcast is published by the Ontario Agricultural College of the University of Guelph. It is produced by Stephanie Craig and Jordan Terpstra. Recording and editing by Jacob [inaudible 00:28:49] and Kyle Richards. The host is me, Graeme Li. If you liked what you heard, be sure to leave us a review and subscribe. Thanks for listening.