My perspective - Investing in the future
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- Published on Thursday, February 1, 2018
Kate Jackman - Atkinson
Neepawa Banner & Press
The province’s agricultural industry faces a major challenge when it comes to succession— the high cost of entry. Few other jobs require such a high upfront investment; you don’t need to own a hospital to become a doctor or a school to become a teacher, but you need a farm to be a farmer. The cost of land, equipment, livestock, seed and other inputs is high and only rising. At their recent annual general meeting, Keystone Agricultural Producers, Manitoba’s general farm policy organization, passed a resolution to help combat two problems, with one simple solution. The high cost of entry for young farmers is one problem, while the other is the purchase of farmland as an investment vehicle.
The resolution passed by KAP members last week authorized the organization to lobby the provincial government to look at a five per cent levy on farmland sales to any investor who hasn’t been actively farming within the last three years. KAP would like to see the money raised by the levy used to enhance Manitoba Agricultural Services Corporation’s Young Farmer Rebate program, which offers reduced interest rates on farm-related loans to borrowers under 40 years of age.
Driven by a number of factors, including rising land prices and higher potential rents from newly available crops, farmland is becoming an attractive investment for those who have no intention of farming the land themselves. The Ontario Teachers Pension Plan, for example, has a portfolio that includes farmland, which is rented to local farmers. With many of the province’s early European settlers coming to Canada to escape peasant farming for rich landowners, farm ownership as an investment tool is cause for some unease.
These investors’ entry into the market has played some role in rising land prices. Saskatchewan is a case in point; in 2003, the province loosened its regulations, allowing non-residents to purchase farmland. Institutional investors began entering the market and in 2014, the Canada Pension Plan bought $128 million worth of farmland. In response to rising land prices shutting out some local farmers, the province tightened regulations again in 2015.
While rising land prices are bad for young buyers, they are good for those selling. With many farmers reaching retirement age in the next few decades, selling their farmland is an important part of their retirement plans. Having more potential buyers is good for them and the, often rural, communities in which they will be spending their retirement. Even if they aren’t planning to sell, higher land values benefit all those who already have farmland.
Supporting young farmers is crucial to the long-term viability of Manitoba’s agricultural industry and the rural communities it supports. Statistics Canada’s 2016 Census of Agriculture showed that the average age of Manitoba farm operators is 53.8 years and just over half of Manitoba farm operators are over 55 years of age. The good news is that Manitoba has the country’s largest proportion of farm operators under 35 years of age.
It’s safe to assume that a lot of land will be changing hands in the next 30 years, but without an influx of new farmers, there will likely be a smaller pool of potential buyers. Stats Can also found that the number of farms has been falling steadily since 1941. In 2016, there were 14,791 census farms, 6.8 per cent fewer than in 2011.
The provincial government should give KAP’s proposal serious consideration. It supports existing farmers by helping to ensure competition among buyers, while favouring local farmers. In putting the levy towards MASC’s rebate program, it offers additional support to young farmers. We need to think about how we support current and future farmers as they navigate what could be a dramatic change in the province’s farm ownership.
