SASKATOON – Contrary to predictions by the federal agriculture minister, farmers who rent land are having a tough time negotiating cheaper lease agreements, say provincial farm management specialists.
“Landlords are uncertain to the size of the payout and are not very eager to start renegotiating any rental rates,” said Wally Happy-chuck, an agricultural representative in Vita, Man.
Federal agriculture minister Ralph Goodale has repeatedly said if the Crow buyout is paid to landlords, renters will benefit by lower lease rates.
Happychuck said he’s been getting calls from renters and landlords about negotiating new lease agreements now that the federal government has said it is ending the Crow Benefit that helps farmers haul grain by rail to export.
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“The whole thing seems up in the air. There’s no rules to go by now,” said John Hollinger, an agricultural representative in Virden, Man.
Firm decision needed
“I can see a lot of people signing one-season land lease agreements until firm decisions are made. In reality if the lease doesn’t say anything the landlord doesn’t have to pay anything.”
Although the rules haven’t been finalized, the first cheques of the Crow buyout are supposed to be paid to landowners by the end of the year.
Agricultural representative Murray Frank said it’s hard for landlords to reduce farm rental rates when they don’t know how much of a payout they will receive. It’s estimated landowners will get about $20 an acre in the one-time $1.6 billion payout.
The Carberry, Man. representative said some farmers are now worried about long-term leases they signed with no clause about a price change if the Crow Benefit was eliminated.
Although the payout will be a benefit, Frank said the increase in fertilizer prices will have more of an effect on the farmer’s profit.
“The increase in fertilizer prices is far more substantial than getting $4 to $5 off a land lease.”
In the Carberry area, land is leased from $25 an acre for grain land to $100 an acre for potato land.
Farmers in Alberta are in the same quandary, said John Erdman, a farm management specialist in Vegreville.
“They don’t want to pay more for rent than they have to, but they don’t want to let the land go.” He said he hasn’t heard of rental rates dropping.
“I’d be suspicious a lot of people aren’t going to back out on rent until next year when they have less money.”
Graham Gilchrist, a farm management specialist in Taber, Alta., said recent higher commodity prices will have a tendency to keep land prices high. If so, he expects rents to stay the same.
Foreign ownership
In British Columbia there is concern about the payout going to landowners because of a large percentage of European owners in B.C.’s Peace region, said Harvey Glasier, a farm management specialist with B.C. Agriculture in Dawson Creek.
It’s estimated about 30 percent of the million acres of land in the area is foreign owned.
In an interview last week, Goodale said he wasn’t surprised lease rates hadn’t been lowered. He expects them to drop later this year when landlords see their first cheques.
