High prices identified as farmland security issue

Senate committee identifies the cost of buying farmland as a deterrent to the next generation of farmers and a threat to land ownership

A group of Canadian senators has published a report that hopes to answer one of the perplexing questions facing western Canadian farm families: how do we keep Canadian farmland in the hands of Canadian farmers?

“Farming is a challenging way to make a living at the best of times,” said Senator Diane Griffin, who chairs the Senate agriculture committee.

“Weather, financing and foreign competition are all daily issues Canadian farmers must contend with. However, there is a new issue emerging: the cost of farmland.”

Across Canada, the cost of buying farmland is becoming a deterrent to the next generation of farmers, said Griffin.

According to data compiled by Farm Credit Canada, farmland values increased by an average of nearly 15 percent per year between Jan. 1, 2011, and Dec. 31, 2016.

Some of the steepest increases occurred in Western Canada.

In Saskatchewan, for example, average values rose by nearly 18 percent a year from 2011-16.

With prices and demand for farmland rising so rapidly, the issue of farmland ownership has emerged as an issue of national importance, the Senate committee concluded.

The report, entitled A Growing Concern — How to Keep Farmland in the Hands of Canadian Farmers — examines factors that have driven up farmland values and makes five recommendations aimed at ensuring Canadian farmers continue to have reasonable access to farmland, their most important resource.

“Unless something is done to give farmers some relief from the high cost of acquiring farmland, this vital industry and traditional way of life will begin to wither on the vine,” Griffin said.

Norm Hall, past-president of the Agricultural Producers Association of Saskatchewan, said he was pleased the Senate committee identified farmland ownership as an issue that warranted attention.

He said the report’s recommendations are generally consistent with what farm groups, including the Canadian Federation of Agriculture, have been asking for.

Among other things, the report recommends:

  • increasing the capital gains tax exemption for farmland sales
  • improving provincial and territorial data collection systems that show who owns Canadian farmland and who is buying it
  • recognizing farmland ownership as an issue of national significance that requires a greater level of policy co-ordination across federal, provincial and municipal jurisdictions

Hall said increasing the capital gains exemption for farmland sales would potentially allow farmers to sell their land at a lower price but retain a higher net value by reducing or eliminating capital gains tax.

Under that scenario, established farmers who are looking to sell farmland could benefit by selling land at a lower price, presumably to younger farmers or other farmers who would like to expand their land base.

Hall, one of approximately 60 witnesses to appear before the Senate committee, also applauded the report’s recommendation for improved data collection.

“That’s something that (farm groups) saw right across Canada, was that none of the provinces had a really good handle on how much of the farmland was held by foreign investors, how much was held by institutional investors and how much was actually held by farmers,” he said.

“A lot of provinces are trying to change their laws to strengthen them as far as farmland ownership is concerned, but if you don’t have proper data, how are you supposed to accomplish that? How are you supposed to determine if the changes you made are having the intended effect?”

Dan Mazier, president of Keystone Agricultural Producers in Manitoba, agreed that there is a need for improved data collection that shows who owns land and how it is being used.

He said the lack of accessible data in Manitoba is surprising, given that land is so important to the agricultural industry and the province as a whole.

“It’s interesting (because land) is a finite resource and how we manage it is going to become more important because the world’s population is growing,” Mazier said.

“There’s more people living in the world than ever before and there’s less room for every one of them, so issues like how we feed ourselves and how we use our land are going to become more and more important.”

David Connell, an academic who studies land use planning and farmland protection, said he was pleased to see a recommendation in the report calling for federal and provincial governments to work more closely together to protect and promote the use of land for agricultural purposes.

Although farmland ownership falls under provincial jurisdiction, the federal government can play a leadership role by identifying land use as an issue of national importance and encouraging policies that limit the loss of Canada’s most productive land to urbanization and development, he said.

According to data from Canada’s most recent agricultural census, Canada’s farmers leased nearly 45 million acres in 2016.

That’s nearly 28 percent of the farmland used for crop production.

In Saskatchewan, the amount of land that is leased, rented or crop shared rose by nearly 2.5 million acres from 2011-16.

The total area leased by Saskatchewan farmers now stands at 19.5 million acres, compared to 37.8 million acres owned by the farm operators themselves.

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