Canadian farmland must be kept in the hands of farmers, a new report from the Senate agriculture and forestry committee argues, with particular attention needed to ensure young farmers continue to have access to farmland.
The committee’s 40-page report, called A Growing Concern: How to keep farmland in the hands of Canadian farmers, comes after more than two years of study that included testimony from about 60 witnesses from around the world. The committee was prompted to study the issue of farmland after the concern was raised by stakeholders during other studies.
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“The family farm has been the backbone of rural Canada for generations,” the report notes. It was tabled quietly in mid-March and includes five overarching recommendations.
They include asking the Department of Finance to increase the lifetime capital gains exemption for qualified farm property, better data collection, soil mapping, data sharing and co-operation between provinces.
The lifetime capital gains exemption for qualified farmland, currently set at $1 million, is inadequate given the steady increase in farmland value and the size of farms today, Prince Edward Island Senator Diane Griffin said in a March 19 interview.
She did not say what that increase should be.
In 2015, the average price of Canadian farmland increased nationally by 10 percent. Ontario has the most expensive farmland in the country, at up to $10,000 per acre on average. Saskatchewan had the cheapest at $1,200 per acre.
Increasing the capital gains exemption would also help young farmers “trying to get into the business,” Griffin said.
The high cost of farming was flagged several times in the report, with senators and witnesses arguing it “creates a barrier to young or new farmers.”
The average farmer in Canada is 54 years old. As such “the aging farm population means support for young farmers is needed to maintain the sector’s activities,” the report said.
Many young farmers today rent farmland because buying it is cost prohibitive, the Senate noted.
The area of rented farmland as a percentage of total farmland in Canada increased to 27 percent in 2011 from two percent in 1986, according to Statistics Canada.
That increase has producers worried, the report said, noting “this type of ownership makes farmers employees rather than owners and exposes them to additional risks because of rising rents.”
Finding ways to support young farmers is an ongoing challenge that industry and governments have grappled with for years.
Some financial institutions, including Farm Credit Canada, have developed special loan programs aimed at young producers looking to get into the business.
As well, many farm groups have created mentorship programs designed to help young producers.
In November 2010, the House of Commons agriculture committee studied the hurdles young farmers face and urged the federal government to make it easier for young producers.
At the heart of that report, MPs found that the future of agriculture depended on the industry’s profitability. As one young farmer told the committee at the time, “I don’t see many young farmers wanting to get into a business that you have to spend money to make none.”
Today, the sector’s profitability remains a critical concern.
“A lack of competitiveness hurts farmers’ incomes, which could lead them to quit farming or abandon land that is suitable for agriculture,” the report reads.
In the past, poor economics and an infrastructure deficit has led to farmland being abandoned, the Senate was told. That land is now mostly forested and difficult to reclaim.
