Lease auctions may raise Man. grazing rates

The provincial government plans to replace the current points system for leasing crown land with a public auction

PORTAGE LA PRAIRIE, Man. — There could be public auctions to lease crown land in Manitoba next November.

For years, Manitoba has used a complex points system to determine who wins the right to lease agricultural crown land. The provincial government has been planning to change that system and it looks like it has decided on public auctions — either in person or online.

“I want to be clear. I’m not talking about selling the (crown) land. We’re talking about an auction of the leases on the land,” said Matthew Lowe, leader of legislation and regulatory development with Manitoba Agriculture.

“The timeline is still being finalized, but we’re kind of hopeful that by the end of 2019 there might be some (public auctions).”

Lowe spoke about changing the leasing system for agricultural crown land at a Nov. 12 meeting of Keystone Agricultural Producers in Portage la Prairie.

Manitoba is moving to public auctions for crown land because many producers dislike the current way leases are allocated. Farmers have said it’s not transparent and applicants were often confused by the final decision.

“The current point system was difficult to understand…. A lot of unknowns … (around) who was getting it and why,” said Brian Lemon, Manitoba Beef Producers general manager.

“We argued that an auction would be a good way to go, so we’re happy with that change.”

Changing how crown land is allocated could have “huge” implications for Manitoba cattle producers, Lemon added.

There are about 1.45 million acres of agricultural crown land that can be leased to farmers in the province. A percentage of beef producers rely heavily on crown land for hay and pasture.

“There’s some areas where there just isn’t any deeded land available…. Crown lands are huge for some of our guys,” Lemon said.

“If we’re going to grow this industry, we need to make sure this land is used in its most effective way.”

Besides moving to public auctions, the province has been consulting with producers on a number of other changes to the leasing of agricultural crown land:

  • Who is eligible to bid on a lease?
  • How much crown land can a producer lease?
  • How long should a lease last?
  • Should the system be tilted in favour of young farmers who are getting started in agriculture?

Lowe put those questions to KAP members at the Portage la Prairie meeting and received plenty of feedback.

Nick Matheson, who farms near Stonewall, is concerned that an auction system will drive up the cost of leases, giving an advantage to established livestock producers who can afford to pay more for crown land.

The new system will set a limit on how much crown land a producer can lease, which should prevent large players from acquiring tens of thousands of acres.

The limit will be based on animal unit months (AUM), or the amount of forage required to feed one animal for a month. The province is considering a limit of 4,800 AUM for leases on crown land, but that number isn’t finalized.

“We’re hearing from producers … that the limit should effectively be doubled,” Lowe said.

“(What) we’re hearing is it takes double the limit just to be viable (for) a cattle operation.”

Other producers at the Portage meeting were concerned about the appropriate length of a lease. It should last long enough so farmers will invest in land improvements but short enough so that leases come up for auction.

“Fifteen to 20 (years) would be max, in my opinion,” said Les Felsch, who farms near Ridgeville, Man.

One possibility is three leases, each 10 years in length, Lowe said.

After 10 years the lessee would have the option to renew the lease, but after 30 years the lease would go up for public auction. However, there will likely be a provision where the next generation in the family farm has an opportunity to take over a lease.

The province still has to sort out many details, but it’s obvious public auctions will increase the cost of leasing crown land in Manitoba. The price of leases has been frozen since 2013, and Manitoba prices are now out of whack with Saskatchewan.

The cost of renting crown land in Manitoba to feed a 1,000 pound cow for a month is $10.65.

The leasing cost in Saskatchewan to feed the same cow for a month is $44.85.

Lemon isn’t especially worried about increasing lease costs. Beef producers will pay the appropriate price if they see value in the land, he added.

“I think crown land prices are going to go up, whether they go to an auction or not,” he said.

“Valuing the land based on its capacity to produce beef, that makes sense to us.”

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