Monday, 4 June 2012

More on Big vs Small

I am full of respect for the many people who think about food beyond what's on sale at the Superstore (like those who read this blog).  That's why I wanted to expand a bit on some thoughts/ideas from the last post, principally the ability of small farms to form the basis of a functioning provincial economy. I wish they could,  but  we don't live in Disneyland, and farming and the food business in a globalized market  is brutally tough.

Here's perhaps the most important question:  if large farms have lost so much money over the last decade (which they have), and some are a risk to the environment as well, how can that good for the province?  Here's where the "magic" (pitfall might be a better word) of debt and equity play their part.  Large commercial farms contribute a lot to the provincial economy regardless (often in spite of) whether they make a profit. Banks provide large lines of credit based on the "equity" a farmer has (the value of the farm and assets minus loans and liabilities), and that allows farmers to buy fuel,  fix tractors, hire workers, buy seed, fertilizer and pesticides, get the vet in when animals are sick and so on. All these industries, services and people benefit from the farms' economic activity, and they in turn pay salaries, buy goods and services, etc.  Economists talk about the velocity of money, the ability of one dollar to go through many hands, and be the basis of much more than a dollar's worth of  activity. And along that economic chain, the provincial government gets a share that then can be used for health and education. This isn't to say that small farms don't contribute, but their equity just doesn't allow enough money to get up in the air every Spring to do much for the province. Now I'm not saying this is a system that makes much sense, but it's the economic world we live in.

It's also why when provincial politicians say that farming, fishing, and tourism are the basis of PEI's economy, they're actually telling the truth. Each province has certain primary industries (farming, fishing, oil-gas, forestry, autos)  that other goods and services industries  develop around. These are PEI's (along with huge dollops of federal cash, another story). There are many economists who  argue that Canada has moved to a "knowledge and services" economy,  beyond "hewers of wood, and drawers of water" (love that word hewers). There are certainly industries here and elsewhere in Canada that no one had ever thought of two decades ago  (RIM anyone), and many contribute to our economic well being. They don't appear to be  the bedrock we all had hoped for (RIM anyone), and certainly here on the "million acre farm" we've got to hope that people who get their hands dirty are making some money too.

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