No. 11: Ontario's Tile Drainage at 2000
The Ontario rural-based tile drainage industry is represented by the Land Improvement Contractors Association of Ontario (LICO). Drainage contractor members install corrugated plastic drainage tubing and clay drain tile on individual farms. The object is to improve the productivity of the farmers* land base, reduce the unit cost of production, provide for a wider range of crops that may be grown, reduce soil compaction, reduce surface runoff and limit the surface erosion of fields. They also construct closed outlet drains which carry water from farm fields to a safe, efficient, outlet. Some contractors have the proper equipment to construct open ditches as Municipal Drains.
LICO contractors are equipped to do other work associated with land improvement. Many members are certified erosion contractors with the skill to rectify serious erosion problems. They also contract to drain municipal roads and to upgrade and drain farm lanes. To a lesser extent contractors provide their expertise in septic tank renovation and construction, waterline installation, manure management and the drainage of local sports facilities. These contractors are capable of most general earth moving jobs required in rural areas.
At the end of the century the tile drainage contracting industry of Ontario comprises about 110 independent businesses. They operate 200 drainage machines of which 111 are drainage plows. Contractors also have a substantial capital investment in ancillary equipment such as transport floats, back-hoes, bulldozers, trucks. Contractors also have some very expensive high-tech equipment such as lasers for grade control and surveying, global positioning systems, and computer mapping equipment. The industry gave employment to 800 - 900 rural-based people. There are 480 persons licensed by OMAF to operate a drainage machine.
Capital investment in the tile drainage contracting industry is high. Small and beginning contractors, which represent about one-quarter of the total, must have a minimum business investment in excess of $250,000. About one-half of the contractors have a capital investment of $750,000, with the larger one-quarter of contractors having capital investments in excess of $1,500,000. The total capital investment of the tile drainage contracting industry is estimated to be $90 to $ 100 million, a very substantial rural industry.
There were approximately 100,000,000 feet of locally produced corrugated plastic drainage pipe and clay tile used for agricultural purposes. This is an annual investment by 2,500 farmers of about $50,000,000. This investment improved about 108,000 acres of land.
The industry uses drainage pipe and other products produced in small Ontario towns. Some of these towns include: Exeter, Hensall, Embro, Grand Valley, Embrun, Melbourne, Woodstock, Arva, Ilderton, Earlton, Walkerton, Concord, Chatham, Winchester, St Clements, Linwood,Chesterville, Peterborough, Guelph, Paisley, Norwich, Waterford and Clinton.
In addition to giving employment in the above local towns LICO. contractors also contribute about $5 to $10 million annually to many local businesses for repair and maintenance of machinery.
Three Ontario companies currently manufacture drainage plows and trenching machines. In the past many machines were exported. One manufacturer has produced several very specialized drainage machines for Egypt and Pakistan. Most Ontario tile drainage contractors buy and operate Ontario made drainage equipment. There is a modest export business to the United States.
The drainage industry is sensitive to the price farmers receive for their product. Our prosperity depends on the prosperity of the agricultural community. The industry is also affected by the spring and fall weather. The contractors are also affected by the farmer s opportunity to participate in the Tile Drainage Act loan program once the farmer has made a decision to improve the drainage of his land.
Financing Drainage Investment
Successive governments since I 878 have provided a loan which farmers may borrow through their local municipalities to pay a portion of the initial investment of installing tile drains on his farm. The loan is repaid to the government over a 19 year period. Interest rates have varied but are usually less than the government prime rate for long-term loans. It is the availability of this up-front" capital that has made this government program so successful - the envy of many farm groups in the United States and other provinces.
The Tile Drainage Act is a low cost government program inasmuch as a substantial part of the administration is borne by the local municipality. The financial cost to the government is the small interest differential. For example, in 1989, the total money out on loan was $100 million. The interest differential on this amount was $3.8 million, or about 4 percent. Also, in the last year new loans to farmers amounted to $13.2 million, but the farmers repaid $22.8 million on previous loans giving the government a net positive cash flow on their investment. The "subsidy" is declining each year.
The Ontario drainage loan program is superior to the grant and subsidy programs of Quebec and the Maritimes. In Ontario, the farmer pays the fijI1 cost of the service but the loan program permits the farmer to make the initial cash outlay for the investment and then rely on increased income from the investment to repay the loan. The loan does not usually affect the farmers day to day line of credit for operating expenses at a bank. Defaulting on a loan is almost unheard of
A decade ago loans under the Tile Drainage Act financed about 75 percent of the tile drainage work. Today, it is probably 50 percent due to constraints of the loan program.
Drain tile installation has been about 90 million feet a year. The average tile drainage loan represents about 60 percent of the cost. Therefore, the government is supplying 30 percent of the capital, as a loan. This fosters over half the activity in the industry.
Last year 21 percent of all Tile Drainage loans were made in Eastern Ontario. Almost 1 0,000 acres of land were improved through tile drainage which will certainly improve the economy of the area.
Historically, most Tile Drainage loans have been used in the counties of Essex, Kent and Lambton. These counties are still very important recipients of the loan program where the work here is one of renovation and repair.
l-Huron, Middlesex and Perth counties are currently the high demand areas, using more than 26 percent of all loans. Last year 334 farmers in these counties used the program to benefit 13,400 acres.
The Tile Drainage Act loan program costs government very little but greatly assists the farmer. It supports a substantial ruralbased tile drainage industry.
Tile drainage has permitted the spread of corn and soybeans throughout the productive areas of the province. In one generation we have witnessed the vast changes which drainage technology, corn breeding, and other production methods have brought to the benefit of the farmer and to Ontario citizens.
Tile drainage pays! Data on the production of drained and undrained field have been collected by the Crop Insurance Management program from 1979. These data shown in accompanying table are provincial averages. They show that improved tile drainage will easily increase the yield of major crops by about 40 percent over the long term.
The management factors associated with tile drainage often exceed the benefits to be derived from a simple yield increase. Earlier planting dates aid the date at which harvesting can occur are advanced thus reducing the risk of crop loss, or the drying costs for wet corn.
Drained land also presents the farmer with a broader range of crops he may grow amid the ability to change land use by converting sloping land into pasture to reduce surface erosion and other environmental problems.
Drained land permits the farmer to grow the same amount of produce on 40 percent less land. It also reduces the inputs needed for efficient crop production.
Forage production, particularly alfalfa based mixtures, are increased substantially in the second and third years on drained land.
Drainage systems can have an influence on the environment in three ways:
construction of the system will probably modify the local hydrologic cycle, drainage water quality may deteriorate water in the receiving stream and drainage is considered to be a competitor with wetlands and nature conservation in some areas. Each of these points must always be considered during the design and operation of any drainage system.
L1CO has financed research on the movement of nitrates into and through drains from natural sources as well as from commercial fertilizer and animal sources. Organic phosphorus from manure and pesticides also are found in tile drainage discharge.
Good management practices must be adopted by the farmer to minimize these effects.
LICO contractors can design water control systems amid sub-irrigation systems which will reduce these environmental effects.
Environmental impacts may be positive or negative. Often they compensate for each other. For example, the buffering action of a drained soil reduces surface run off but the total volume of water may increase with time as a greater volume of soil is drained. That is, a wet soil has no capacity for surface water and it runs off the surface quickly. A drained soil has storage capacity and will release this water slowly thus reducing flood peak flows.
Measured in dollars hand drainage remains an important vehicle the farmer recognizes to increase his returns Ii~om crops without the need to acquire additional land.
Every drain must have an outlet which is in good condition, with sufficient capacity to receive the flow of water from the design area of hand.
About 65 percent of all tile drains use a drain constructed under The Drainage Act for an outlet. It is essential that these drains be well maintained in order to protect the very large investment in on-farm drainage.
Municipal outlet drainage currently represents an annual investment of $12,000,000 over 197 projects. OMAF provided grants to the municipal drainage superintendent program of $6,900,000.
Data courtesy OMAF Crop Insurance Management program, 1979 - 1999