Source: The Conversation – Canada
Farmers are facing a cost squeeze as seeds, fertilizers, machinery and land become more expensive. In Canada, the value of machinery per farm rose from $213 in 1901 (roughly $8,000 in today’s dollars) to more than $278,000 in 2016 — a 35-fold increase even after inflation.
To stay competitive and to cover rising costs, farmers are being forced to produce more and reinvest in land and technologies simply to stay afloat. In my recently published research, I argue that many farms have to keep getting bigger just to survive, and that this growth imperative is unsustainable, for the environment and for farmers themselves.
To understand this pattern, I looked at long-term Canadian farm financial data and used Québec cranberry production as a case study to see how rising costs, reinvestment, farm expansion and environmental damage are connected.
Two forces are driving the squeeze
Two structural factors explain how farmers got here.
The first is corporate concentration. The food system is now controlled by a small number of powerful companies. Four firms control around 60 per cent of the global seed market and five Canadian grocery chains capture close to 80 per cent of food retail sales.
Because of this concentration, farmers are squeezed from both sides. Powerful input suppliers charge high prices, while retailers add a long list of retail fees. Fresh-produce listing fees can reach $6,000 per product item.
The second force is what economists call the “agricultural treadmill.” A new technology may initially allow early adopters to lower costs, secure processor contracts and raise their income. But once many farms adopt it, total production rises, prices fall and the early advantage disappears.
The technology then becomes the new minimum for survival. Farmers must keep investing and going into debt to buy better seeds, bigger machines and labour-saving tools, which only intensifies the cost squeeze.
Getting squeezed on prices too
Farmers are not only dealing with rising costs; they’re also getting squeezed on prices. When farms adopt new technologies, lower unit costs often become lower farm-gate prices — the actual amount of money a farmer receives for their raw agricultural produce.
Because of corporate concentration, large processors, distributors and retailers can push those prices further down while keeping more of what consumers pay.
In Canada, 83 cents of every food dollar is now spent after the product leaves the farm (the farm gate price). Corn prices show the problem clearly: corn flakes sell for roughly $7.50 per kilogram while Ontario farmers received under $0.25 per kilogram of corn — a gap of more than 30 to one.
Governmental policies reinforce the cost-price squeeze through subsidies and growth policies. Farm subsidies are meant to help farmers, but they can reinforce the squeeze and the treadmill. They can raise land prices and rents and they can encourage costly technological upgrades that farmers might otherwise postpone such as the AgriInnovate funding. In Canada, each extra dollar of support per acre can increase farmland values by $8 to $72.
Export policy adds pressure as well. Since the 1990s, Canada has aimed to nearly quadruple agri-food exports between 2000 and 2025, pushing farmers to produce more, invest more and compete against lower world-market prices.
Producing more: The only way to stay afloat
Together, the cost-price squeeze and the agricultural treadmill create two pressures that force farms to keep expanding. First, farms face a rising break-even threshold: farm-gate prices stay low or fall while costs keep rising, so farmers must produce more just to cover expenses.
Second, breaking even is not enough. Farmers must produce even more to generate the profits needed to reinvest in machinery, buildings and technologies just to stay on the treadmill and remain competitive.
In Canada, the money farms had available for reinvestment increased 2.4-fold between 1976 and 2021. Capital expenditures rose by almost a third between 2009 and 2023, and total farm capital increased five-fold between 1976 and 2021.
Farms grew larger as a result. Some consolidated as a way to survive the cost-price squeeze and the treadmill because larger operations can better absorb rising costs, deploy expensive machinery efficiently and access credit, which helps explain why 12 per cent of Canadian farms control nearly 60 per cent of farmland.
The hidden environmental cost
As farms expand, they need more fuel, fertilizers, machinery and land just to stay viable. Those requirements don’t simply disappear: they become emissions, pollution, degraded soils and biodiversity loss.
Take Québec’s cranberry sector. Farms must keep expanding to survive the cost-price squeeze, with total harvest per farm increasing eight-fold in less than 30 years.
To increase production and keep prices low for processors, cranberry farms are pushed to withdraw large amounts of water, which can stress rivers during low-flow periods, and convert wetlands because they are cheaper and easier to develop.
This leaves more money for reinvestment, but by destroying wetlands, it degrades biodiversity, releases significant amounts of carbon and fuels climate change.
Separately, farms that use pesticides to reduce labour costs, including dichlobenil, are contaminating water.
What a sustainable transition requires
The cost-price squeeze and agricultural treadmill impose real ecological costs, but they also impose mental ones on farmers. The financial pressure they create can add to farmer distress and suicide risk.
Some supposedly sustainable solutions, such as smart agriculture, risk becoming another wave of the treadmill. A genuine sustainability transition that addresses farmers’ financial and mental health as well as ecological health requires policies that separate farm viability from the need to constantly expand production.
That starts with tackling corporate concentration among farmers’ suppliers and retailers, for example by regulating unfair contract clauses and blocking further mega-mergers. Guaranteeing fairer farm-gate prices would ease the price squeeze directly.
On the cost side, redirecting subsidies, reorienting farm credit and insurance and making farmland more affordable through de-financialization and public land banks would support low-input agroecological practices and reduce the pressure to scale up.
Finally, redirecting investment toward simpler, repairable, farmer-controlled technologies, guaranteeing the right to repair and rewarding farms that adopt lower-tech approaches, would help slow the treadmill itself.
Together, those changes would allow farms to remain economically viable without producing more simply to survive
Henri Chevalier receives funding from SSHRC Canada Graduate Research Scholarship—Doctoral (federal government) and OGS/QEII-GSST Domestic Scholarship (Ontario government).
Original source: https://analysis1.mil-osi.com/2026/07/15/canadian-farms-must-keep-growing-to-survive-and-farmers-and-the-environment-are-paying-for-it/