We hear it regularly whenever agriculture comes up: “Dairy farmers are millionaires.”
That is not entirely false.
Many dairy farms own assets worth several million dollars: land, buildings, livestock, machinery, equipment and, in Canada, quota. Taken together, all of that can represent a considerable amount of wealth.
So why do we not see all these farmers living like millionaires?
Because two very different things are being confused: owning valuable assets and earning a high income.
A multimillion-dollar farm is not a bank account
Imagine a farm valued at $5 million.
That does not mean its owner personally has $5 million. You first have to subtract the farm’s debt and account for the fact that the business may be owned by several shareholders or members of the same family. A farm with $5 million in assets, $2 million in debt and several owners clearly does not make each of them a person with $5 million to spend.
Most importantly, those millions are tied up in productive assets.
A hectare of land worth $30,000, $40,000 or $50,000 does not pay the grocery bill. Neither does a valuable barn. The same is true of a tractor, a cow or dairy quota.
Those assets exist to produce.
To turn that wealth into cash, a farmer generally has to sell part of the production system, borrow more money or, ultimately, sell the business.
It is real wealth. But it is nothing like holding a few million dollars in financial investments and being able to draw on them to fund your lifestyle.
What do farms actually pay out?
A dairy farmer usually does not punch a time clock when entering or leaving the barn. Yet the hours add up: animal care, feeding, milking, field work, machinery maintenance, repairs, administration, paperwork, emergencies, calvings, weekends and long days dictated by weather.
Statistics Canada data provide a useful glimpse of what farm families actually receive in wages.
In 2023, Canadian dairy farms paid an average of $43,710 in salaries and wages to family members, according to Statistics Canada’s Farm Financial Survey.
That figure has to be interpreted carefully. It can cover more than one family member and does not include dividends or certain withdrawals from the business. It is therefore not the “average dairy farmer salary.”
But it illustrates the contrast very clearly: the value of a farm and the money actually paid to the people working there are two very different realities.
A business owner can also build equity as debt is paid down or assets appreciate. That increases net worth without necessarily increasing the amount of money available for day-to-day living.
In other words, owning a share of a business worth several million dollars absolutely does not mean receiving the kind of income usually associated with a millionaire.
“Then just sell the farm”
That is usually the next response.
If the farm is worth millions, why not simply sell it?
Because a farm is not just an investment.
It is the farmer’s workplace. It is what generates income. Often, it is also a business the family has operated for generations and hopes to pass on to the next one.
Telling a farmer they can become rich by selling the farm is therefore a bit like saying: “You could have a lot of money if you liquidated your business and gave up your profession.”
Technically, that can sometimes be true.
But even then, the gross sale price is not what ends up in the seller’s pocket. Debt must be repaid, transaction costs paid and, depending on the situation, taxes may also apply.
And that still says very little about the farmer’s standard of living during the thirty or forty years spent operating the business.
Part of those millions may never be cashed out
Family farms have another important characteristic: they are often transferred to the next generation for less than full market value.
That is not necessarily an act of pure generosity.
A dairy farm may hold enormous asset value without generating enough profit for a young farmer to borrow the full market value of the business.
Take again a farm worth several million dollars.
If the older generation demands every dollar of that value at transfer, the successor has to come up with enormous capital or take on massive debt to buy the business. The same farm then has to generate enough cash to service that debt, pay operating expenses, reinvest and support the new generation.
At some point, the numbers simply stop working.
So for the farm to continue, owners may agree to transfer part of the business below market value.
In other words, a dairy farmer can spend a career building several million dollars of value inside a business, never personally have access to those millions, and then voluntarily give up part of that value so the farm can survive after retirement.
That is a rather unusual definition of a millionaire.
But the wealth is still real
It would be just as misleading to go to the opposite extreme and pretend the value of farms does not matter.
It matters a great deal.
A dairy farmer who owns a business with substantial equity has real wealth. That asset can serve as collateral, appreciate in value and eventually be sold. All else being equal, that is obviously not the same financial situation as someone who owns no assets.
And if an owner chooses to liquidate the farm at full market value rather than transfer it, they may indeed realize a significant amount of accumulated wealth.
There is no reason to deny that.
But that is not the point.
The question is whether the value of a farm tells us the income and living standard of the farmer operating it.
And there, the answer is clearly no.
Millionaires on paper
So, are dairy farmers millionaires?
For some, if you add up the net value of their ownership stake in the business, yes.
But if by “millionaire” we picture someone with a very high income, substantial liquidity and millions of dollars they can freely spend, the image quickly becomes misleading.
A farmer can simultaneously own a share of a multimillion-dollar business, work 60 hours or more in some weeks, draw a relatively modest income and hope one day to transfer that business to their children for far less than an outside buyer might be willing to pay.
That is not a contradiction.
It is simply the difference between being wealthy in assets and being wealthy in available cash.
And when we talk about dairy farmers’ income, that distinction deserves to be made.
This claim is also one of the ten “myths” about supply management raised by Sylvain Charlebois that I examined point by point.
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