Intensification credit as an adjustment vehicle for the low-income farmer
McRorie, Howard Douglas
The Saskatchewan agricultural industry as reported in the 1961 Census, consisted of 93, 924 farm units.1 Of this number, a large percentage must be classified as "uneconomic" in the sense that the return from land, labor and capital is invariably too low to ensure a satisfactory standard of family living. This low-income farm situation is not new to agriculture. It has existed over the years chiefly because of the failure of many operators and their families to adjust to the changing needs of efficient agricultural production. In order that the low-income farmers remaining on the farm might increase their net income however, they must be able to adjust through some combination of increased land base, increased production on present land or increased efficiency of land, labor and capital use. Although increased efficiency of resource use may offer promise of additional net returns for many farmers, the needed volume of income adjustment can for the most part, only be met through expanding the overall scale of production. This expanded production, however, whether by means of additional land or through more intensive land use, requires substantial amounts of extra capital. By restricting family living expenditures, an established farmer can often accumulate much of this capital needed for further expansion. The low-income farmer, on the other hand, cannot adjust in so ready a fashion. With family living standards already too low, he can scarcely hope to accumulate sufficient savings to finance his own adjustment. He must instead, look to credit as the means by which his production and hence income, can be increased. Credit is an important key in meeting the adjustment needs of the low-income farmer; as such, it is the central problem of this study. Despite the need for substantial amounts of credit, the low-income farmer is the least able to qualify for assistance from present lending agencies. This is due in large measure to the fact that credit institutions rely heavily on large amounts of collateral security as the basis for extending loans to farmers. Since the low-income farmer has little to offer in the line of first class security, he is denied the one means by which he could hope to increase his production and hence his standard of family living. Such credit as is currently available, has not been designed to assist the low-income farmer to gain an economic status. The short-comings become even more important as changing agricultural conditions suggest the need for still greater quantities of capital on behalf of today's farmer. 1. A farm, as defined for purposes of the 1961 Census, consists of an agricultural holding comprising one or more acres, and having sales of agricultural products during the 12 months of $50 or more.