The Islands Agricultural Show (IAS) returned to Cowichan on January 31 and February 1, 2025, despite challenging weather conditions. As the only agricultural trade show serving Vancouver Island’s farm and food community—and the second-largest agriculture show in British Columbia—IAS provides a key venue for farmers, rural landowners, industry organizations, equipment dealers, service providers, and the public to connect and learn.
This year’s event featured 66 trade show exhibitor booths and 20 conference sessions, drawing 1,150 attendees, including 300 students and 175 conference participants. The show welcomed a diverse range of farmers, from established commercial producers to new entrants in the industry, offering them opportunities to engage with exhibitors through product demonstrations, services, and discussions on the latest agricultural trends.
Among the many insightful conference sessions, Economic Development Cowichan (EDC) attended “Financial Profitability for Farmers,” a session focused on strategies to help farmers strengthen their financial sustainability. Stuart Person, National Leader of Crop Services for MNP, presented compelling arguments for having a good understanding of the profitability of your farm. He quoted Kristjan Hebert: “If you treat it [your farm] like a business, it’s a great way of life. But if you treat it like a way of life, it’s a really crappy business.”
Person has a strong background in agriculture, as well as being an accountant and analyst. He has lots of compassion for the world of agriculture generally, and the situation of Vancouver Island farmers specifically. Farmers everywhere in Canada are facing challenges and uncertainty: high interest rates, higher feed costs, price volatility, high land prices, rising capital costs, volatile weather patterns, labour challenges and geopolitical uncertainty. All of these challenges create tight margins and reduced profitability for farmers.
But, he argues, even for well-managed, successful farms, there is a wide range of profitability, based on a lot of different variables including the debt load being carried by farmers. When farmers have a detailed understanding of their financial position, it can assist with planning, priority setting, and decision-making. Farmers can then make small changes that can result in huge differences of profitability.
In his presentation, Person presented the 5% rule, which is the idea that making small, incremental improvements across multiple aspects of a farm operation can lead to a significantly larger overall increase in profitability. In other words, the cumulative effect of small improvements across different areas can be much greater than the sum of individual changes. For example, depending on the situation, a farmer might aim to increase their crop yield by 5%, reduce input costs by 5%, and slightly increase their selling price by 5%. In the example provided by Person, these three changes led to an increase of profitability of 132%.
A prerequisite to effectively managing these small incremental changes is to have a strong understanding of your financial statements, prepared using accrual accounting methods. Accrual accounting is based on the matching principle, which states that revenues and expenses should be recognized in the same accounting period. This helps to calculate the true cost of production.
Once the farmer has a strong, detailed understanding of their financial position, they can evaluate their debt structure, which is a huge concern for many farmers on the Island. If current debts are high-cost, talk with your banker about trading it out for lower-cost debt. For example, if you are using credit cards to finance farm purchases and carrying a balance, this is the most expensive debt, often at 19-20% interest. Your bank should be able to provide you with a term loan to cover that debt, with fixed payments, which would be significantly lower than credit card .
In addition to addressing farm finances, Person strongly recommended strategies in the areas of marketing, operations/production, and human resources. Small changes in each of these areas of farm management can dramatically increase farm productivity, which in turn will have an impact on profitability.
Overall, Person’s perspective on agriculture is that there is a bright future for Canadian farmers. He just finished reading a book by Peter Zeihan, called The End of the World is Just the Beginning. Chapter 7 is all about agriculture. Because people will always have to eat, there will always be a role for farmers.
If you want to follow up with Stuart Person directly, his contact information is available here: https://www.mnp.ca/en/personnel/stuart-person.
Written by: Bev Suderman, Planner & Economic Analyst
