BRIDGEN, Ont. — The extent of the problem isn’t known, but the author of a National Farmers Union report says growing corporate ownership of farmland should concern Canadian producers.
“There are no official statistics kept concerning the type of farm ownership,” said Cathy Holtslander, former NFU director of research and policy development.
“In terms of a trend, when investment companies purchase land … they aggregate fairly large parcels. They wait for a number of years and then they sell them. And when they sell them, they tend not to sell them to actual farmers but rather to other institutional investors.”
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A key recommendation from the Losing Our Grip report calls on federal and provincial governments to restrict farmland ownership to individuals who reside in the province in which the land is located or to incorporated farming operations owned by individuals who reside in the province in which the land is located.
Another asks provincial governments to monitor foreign and domestic ownership and control of farmland and publicly report changes.
Holtslander cites the activities of the Calgary-based investment company Agcapita as an example.
The company has bought 50,000 acres since last year, much of it in Saskatchewan for $439 per acre, the report states. Last year, 19,300 acres spread over 16 rural municipalities were sold for $18 million to a financial agency managing the investment portfolio of one of Canada’s wealthy families.
The report also cites growing farm held debt as a related concern.
Ann Slater, an Ontario farmer and NFU first vice-president who discussed the issue last month at the annual meeting of the local NFU in Lambton, Ont., cited figures in the report that show farmer-held debt has risen from $5 billion in 1971 to $64 billion in 2010 and $78 billion in mid-2013.
“I live in Oxford County, a mile from Middlesex and two miles from Perth. There was a farm auction nearby recently where 100 acres sold for $1.975 million,” Slater said.
J.P. Gervais, chief agricultural economist with Farm Credit Canada, said the impact of corporate ownership on farmland values is modest.
He said 60 percent of Ontario’s farmland is owned by farmers and of the 40 percent that’s leased or rented, perhaps one percent is foreign owned.
“What we know is that the vast majority of land transactions are between producers, buying and selling,” he said.
The ownership of farmland by non-farm corporations doesn’t influence agricultural land values in a broad sense, he added, but it does have an impact on a regional basis.
“It allows some producers to make different financial arrangements. I’m not saying if it’s a good or bad thing.”
However, the NFU report said the decline in farmland ownership by farmers is a concern.
“The current policy environment promotes unaffordable land prices, ever-higher farm debt loads and concentration of land ownership in fewer hands, thereby systematically pushing farmers out of business,” it said.
Matt Gehl, a NFU board member from Saskatchewan, said in a news release in March that young farmers face a double whammy when it comes to getting started.”
“We not only have to compete with pension funds and other huge institutional investors in the land market, we also face huge life-time debt loads to pay for land and equipment.”
Much of the activity has taken place in Saskatchewan, where legislation restricts farmland ownership to Canadian residents and Canadian companies but also allows exemptions. The province’s Farm Land Security Board granted permission to transfer 761,130 acres from 2010-14, mostly to commercial and resource extraction companies.
Annual reports from the Farm Land Security Board show that only four out of 130 applications from land investment companies were denied from 2010-14.
The provincial government has since said it will review its farmland ownership rules and has prohibited further land investment by institutional investors, such as pension funds, until the review is complete.
Farmland is also falling under corporate control in other provinces, especially in Ontario, where there are no restrictions to the foreign ownership of farmland, Holtslander said.
Calgary-based Walton International seeks overseas investors, targets land near cities and lobbies municipal governments to open the properties to non-farm development, the report said.
Walton owns 4,500 acres in Brant County, 3,000 acres in South Simcoe County, 300 acres near Ottawa and 11,500 acres altogether, according to company news releases.
Farmland Investment Funds, a firm in Chatham, Ont., with an office in the United Arab Emirates, says it has $70 million in farmland. It focuses its investments in southwestern Ontario.
Other recommendations from the report include:
- Set taxation rates at a lower level for farm families as compared to investors, foreign interests and non-farm corporations.
- Provide incentives for land stewardship and penalties for practices that extract wealth at the expense of soil health.
- Support intergenerational land transfers and support systems such as land trusts and land banks, which do not require massive indebtedness.
- Restrict the transfer of farmland for non-farm purposes.
- Ban farm input suppliers from tying input financing to delivery contracts.
The report shows that farm debt held by agribusinesses and private investors increased from $7.5 billion in 2010 to $8.3 billion in 2013.
