Land ownership views likely to vary

What the Saskatchewan government learns from its farmland ownership review will depend largely on who participates in the online survey.

The question of whether to tighten or relax the rules will likely come down to the age and financial position of the respondents.

At one end are the farmers who want to retire or sell and get the best possible price for their land.

At the other is the next generation of farmers who face the costs of entry.

Land value is key to the debate.

Tom Cameron, who owns farmland near Carievale in southeastern Sask-atchewan, said he sees both ends of the spectrum.

“I’m of two minds,” he said.

“I understand where some people are coming from: that the free market should prevail, and I’ve worked all my life and I would like to reap the benefits of it now,” he said.

“Ten years ago they would be happy to get $50,000 a quarter and now that they have a chance to maybe get $180,000 or $200,000 a quarter, it’s hard to resist. But it does make it more difficult for the succeeding generation.”

Cameron is at the age where selling his land would make sense.

Instead, he has rented it, below market value, to young neighbours and told them to make sure they set aside the money they are saving in rent to buy land some day.

One of the criticisms of a more relaxed ownership policy is that land values will skyrocket as more buyers come into play, and those with more money will outbid Cameron’s younger neighbours.

Farm ownership laws were first passed in 1974 and amended a couple of times since. The last amendment in 2002 eased restrictions to allow Canadians and Canadian controlled companies to own up to 320 acres. Foreign interests were still limited to 10 acres.

People pointed to the earlier re-strictions for keeping Saskatchewan land values lower than those in neighbouring provinces.

Amanda Gabruch, a University of Saskatchewan agricultural economics student, tackled the subject in a recently completed thesis.

Gabruch used Statistics Canada land values data from 1950 to 2013, which was converted to real 2002 dollars to allow for inflation. That accounted for the year the law changed.

She found that Saskatchewan’s policy between 1974 and 2003 did affect prices.

“For years that the policy was in effect, the price of farmland in Sask-atchewan was an average of 3.58 percent to 4.03 percent lower, relative to years where the policy was not in place,” she said in her thesis.

“This suggests that Saskatchewan’s ownership restrictions did artificially depress land values and gives some insight into why farmland prices are much lower than Alberta or Manitoba. However, since 2003, when the restrictions were relaxed, farmland values have increased by an average of 9.06 percent each year in Sask-atchewan… Therefore, not all of the recent increases in Saskatchewan’s farmland values can be attributed to relaxation of ownership restrictions.”

She also found that land values went up .16 percent for every one percent increase in crop returns. The value went up .21 percent for the same increase in livestock returns.

Gabruch’s thesis adviser, Eric Micheels, said strong commodity prices in the past few years have made farmland more desirable.

“That certainly would outweigh that restrictiveness of that policy,” he said.

“You’d still have people that are in the pool that would be available to purchase that farmland. They would be determining the price they would be willing to pay based on the return they could get from farming.”

Gabruch’s thesis did not examine the question of who is buying the land. The province says 80 percent of transactions are still between farmers.

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