It is a sign of changing seasons for Saskatchewan farmers.
Each spring and fall, the Farm Credit Corporation sends out notices advertising farmland for sale.
These advertisements are a twice-yearly reminder that the federal agency is more than a money lender. It also is a major player in the province’s land market, the owner of 786,200 acres of Saskatchewan farmland and landlord to 1,890 farmers.
The corporation owns land throughout Canada, but Saskatchewan boasts by far the largest FCC presence.
It also is a province with a long history of political division over government farmland ownership. Both FCC and the federal government say they would like to quit the land-owning business. Realistically, however, it will not end soon, if ever.
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In this special report, Saskatoon-based national correspondent Adrian Ewins examines the FCC land-owning record, the politics and the critics.
The Farm Credit Credit Corporation is a reluctant landlord, says agriculture minster Ralph Goodale.
The federal lending agency never set out to acquire land, he says. “We are not in the business of being a landlord.”
Like other lenders, it accumulated property in the 1980s as low grain prices and high interest rates brought a rash of foreclosures. Now, the goal is to get rid of those holdings.
“Our objective is to dispose of it as rapidly as is possible to do, without being either unfair to our farm clients or distorting to the marketplace,” the minister responsible for the FCC said in an interview.
Kindersley, Sask., farmer Drew McBain sees it differently.
The 44-year-old farmer, involved in a lawsuit against FCC, is highly critical of the agency’s land policies.”They’re contradicting their mandate of returning land to farmers.”
Meanwhile, supporters of Saskatchewan’s 1970s experiment in public farmland ownership wonder why the government is so spooked at owning land. It can be a good deal for farmers.
Sell-off has begun
Outside the political debate, the FCC already has started to divest. Land ownership peaked in 1992-93 when it held 2,803 properties totaling more than 1.33 million acres, worth an estimated $232 million.
Since then, acreage has been whittled down by 37 percent to just under 841,000 acres, with a value of less than $150 million. Ninety-seven percent of the land is leased to the former owners.
FCC land ownership and what the agency is doing about it are primarily Saskatchewan issues.
Saskatchewan’s farmers were hardest hit by the disastrous economic conditions of the late 1980s and early 1990s, and it is reflected in FCC’s real estate portfolio.
As of Oct. 31, FCC Saskatchewan holdings of 786,200 acres compared with just 37,400 acres in Manitoba, 13,300 acres in Alberta and British Columbia, 3,200 acres in Ontario and 700 acres in the Quebec/Atlantic region.
Don Jackson, general manager of Agri-Land, the land leasing and sales division of FCC, said the corporation always will own some land due to loan defaults. It is part of being a lender.
However, the acreage should continue to decline rapidly for the next few years.
“I can’t forecast exactly what the future holds, but at the present trend, we would probably be down to a couple of hundred thousand acres by the turn of the century,” he said.
FCC land policies have their critics.
Some say the corporation, and the government, should be trying harder to return leased land to its former owners more quickly and at lower prices.
Others complain FCC’s prices are well above the local markets. They say FCC uses its massive holdings to manipulate the market and to boost profits.
But there also is agreement among observers of the province’s land market, including academics, real estate professionals, provincial bureaucrats and farm group officials, that while individual farmers may have valid complaints about specific situations, there is no evidence to support a general condemnation of FCC land policies.
Richard Schoney, a University of Saskatchewan agricultural economist, says the agency is in a difficult position, trying to satisfy its tenants, potential land buyers, other landowners, political critics, government masters and taxpayers.
“I don’t have a hard time being a little bit kind to them and saying they’ve done the best they could,” he said. “I’m not necessarily a fan of government institutions but I think they’re seen as guilty regardless of what they do.”
Bob Lane, owner of Regina-based Lane Realty Corp., which specializes in farmland, said the land that was owned by lending institutions has been worked through the market “fairly well.” He said there is no evidence the FCC has been dumping land or trying to manipulate prices.
“Overall, they seem to be reflecting current market values,” said Lane.
Alan Syhlonuk, a provincial government land policy analyst, said he doesn’t think FCC tries to manipulate prices to its advantage.
“From an individual’s point of view, if I want to own land, I could say that by not putting it out and selling it for whatever they can get, they’re propping up the market,” he said. But if the agency was to just dump land on the market, it would then get criticized by landowners for driving down prices.
Of course, FCC isn’t the only institutional land owner in the province. The provincial government owns about 946,000 acres of cultivated land and on Aug. 31, the chartered banks owned 261,784 acres and credit unions another 234,600 acres.
Ready for quick sale
Stuart Bond, agriculture manager for the Royal Bank in Saskatchewan, said the bank doesn’t want to own any land and will dispose of its holdings as quickly as the law allows.
The 1992 leaseback legislation entitles a farmer to a six-year lease in the event of a foreclosure or quit claim. During the next three years, 439 leases out of 1,100 are slated to expire. The farmer has right of first refusal on the land.
“We own no land in Manitoba or Alberta and we wouldn’t own any here either except we’re complying with the laws of Saskatchewan,” said Bond, whose bank owns more land than any other chartered bank.
By the end of 1997, the Royal’s holdings should be down to around 35,000 acres, he said. About 85 percent of the bank’s land is sold to the former owner. Bond said he can’t see the banks ever returning to the days when they took hundreds of thousands of acres from financially troubled farmers. Banks are much more careful in their lending practices, he said, and farmers have developed more business acumen.
“If there’s anything positive that came out of the dreadful Eighties, it would be those two things.”
