Benefits and costs of land clearing in the Interlake area of Manitoba

Abstract

The Interlake is a depressed region with emphasis on mixed farming and beef cattle grazing. Land clearing was initiated in the Interlake area of Manitoba in September, 1967, under an overall FRED plan designed to upgrade the economic condition of the rural community. Other projects included drainage maintenance and reconstruction, education and manpower training. Large sums of money were being pumped into the economy. This prompted the present study with the following main objectives: a) to provide useful information to decision makers for framing future resource development policies; b) to provide valuable information to farmers in the area to determine the economics of clearing more land. Discounted gross benefit-cost ratios were used to determine the profitability of clearing additional land. A total of 600 farmers cleared land over a three year period of analysis. A sample of 90 was chosen for study, comprising all of the three soil capability classes in the area. The gross benefit-cost ratios were not found favourable in general. Farmers were then stratified into those who produced for only one year, two years and three years over the period of analysis. Farmers who produced for three years were found to be younger and more successful in respect to education and farm operations. Their gross benefit-cost ratios were relatively better. Benefits and costs were expanded for the whole area on the basis of average returns and costs to those farmers who produced for three years. As additonally cleared land was recognized as a source of perpetual income, projections were made for 2 years and up to 25 years in the future. On the basis of these projections, the project was found to turn profitable after a period of three years. Data for the study was made available through the Interlake Land Clearing Evaluation Survey, 1971, conducted by the Department of Agricultural Economics, University of Manitoba. The time period involved was 1967-1968 to 1969-1970.