The fight to protect Class 1 farmland in Ontario
Tuesday, January 6, 2015
When farms in Dufferin County were threatened by the prospect of a massive limestone quarry in the neighbourhood, the community rallied round. And in the end, says local farmer Bill French, it was Ontario that won
by JIM ALGIE
When the French family moved to a patch of Honeywood loam in 1988, it was the third relocation for a farming business that began more than 100 years before.
So when agents came knocking on their door in Dufferin County during a mysterious land acquisition project for what turned out to be a massive limestone quarry nearby, Bill French wasn't inclined to move again.
The Highland Companies' quarry plan, backed by a Boston investment firm, would have meant pumping water out. French, for one, feared groundwater disruption for area farms and downstream communities.
It could also have interfered with what makes Honeywood loam so good for the crops French grows, mainly Brussels sprouts, rhubarb and sweet peas, strawberries, beans and cabbage for the Toronto fresh market.
"It's silt with a bit of clay texture and a bit of sand, so it drains extremely well," French says. "We can tolerate probably 10 weeks of drought because we've got the limestone beneath us. It acts like a wick and feeds the water up," he says.
Bill, his wife Diane and son Brian own and run the operation, which also employs two part-timers year-round and as many as 11 field workers from April-through November, some of them students, some offshore labourers. The Frenches have been hauling produce for 42 years to the Ontario Food Terminal in Toronto, where Bill has maintained a terminal stall for most of that time. Brian and his wife, Jeanette, also run an on-farm retail stand that has become an increasingly important source of farm revenue in recent years.
At the peak of excitement over Highland, the Frenches and their immediate neighbours – the Blacks and Vanderzaags – were at ground zero for Foodstock. That was the unprecedented, 2011 cook-in that brought 100 high-profile chefs out of their Toronto kitchens and into the Vanderzaags' woodlot to feed a crowd that exceeded 20,000 and to protest the quarry proposal.
When Highland withdrew its application in November of 2012, Carl Cosack, former chairman of the North Dufferin Agricultural and Community Taskforce (NDACT), explained in a recent interview that it was a triumph of reason and community organization over "maximizing shareholder returns." But resistance from established farmers was key, Cosack said. He knows of one farm couple in their sixties who spent a week with a $2 million Highland cheque on their kitchen table before deciding they just couldn't cash it.
While Highland officials were busy planning their entry and ultimate exit from the quarry business, the Frenches had been planning to build on the family's 130-year-old, agricultural tradition. Named for a maternal ancestor, Lennox Farms is one of the largest growers of fresh market brussels sprouts in Ontario with a long-standing and relatively rare specialty in forced rhubarb.
Bill's grandfather once farmed near Islington Ave. and the Queensway, now Etobicoke, before urban expansion forced the family to buy land in the Brampton area. A generation later, a golf course proposal convinced Bill's father, Clarence, to retire from farming through a deal that would help finance his son's future in agriculture. But it also meant Bill had to look elsewhere for land.
The Lennox Farms logo Bill wears on his T-shirt shows a red heart and two sticks of rhubarb. Forced in winter storage buildings, rhubarb provides for sales and cash flow as early as February in an operation that has almost no down seasons.
They start seeding brussels sprouts in greenhouses the first week of April, while rhubarb continues to reach maturity in staged batches. They harvested 100 acres of peas this year from mid-July to mid-September.
Their 53 acres of brussels sprouts expanded from 34 acres in 2013. Most sprouts are sold in 20- and 25-pound boxes through Toronto brokers to chain stores at reasonably steady prices between $1 and $1.25 a pound.
"We looked at the markets and realized there was a bit of a niche for brussels sprouts at Thanksgiving," French said. "The Americans weren't really into full-steam production at that time, so there was a bit of a shortage from September until Thanksgiving."
It's a tricky crop that requires the well-drained soils and cool climate Dufferin offers. It also requires protection from brassica-loving insects, notably aphids and Swede midges. Once picked by hand, the expanding brussels sprout crop is now harvested mechanically with a self-propelled, two-row, tracked harvester obtained in 2012 from Tumboa, a Dutch supplier.
A producer of grass-fed beef from 120 mainly-Angus cows, Cosack headed NDACT through a three-year-term that wrapped up last fall.
"They literally put their life investments on the line," Cosack says of decisions made by those supporting the protest before fighting quarries seemed like a winning proposition. It came to a head even as the Frenches were planning expansion to accommodate another generation in farming.
In addition to 300 acres at the home farm, they lease 100 acres about six kilometres away. Two years ago, Brian and Bill purchased another 93 acres just as Highland decided to back off its quarry application.
"It was a little chess game we were playing," Bill French says of his relations with quarry promoters. He was buying land despite Highland activities, including an off-farm home surrounded by Highland options. "I said I'll just put my nose right in there," he chuckles, obviously amused with the eventual outcome. "It was like we were pawns in the chess game," he says.
Asked the obvious question about who won that game, French shifts the focus from his own moves to those of the broader community.
"Ontario won," French says of the high-profile fight to protect Class 1 farmland in Dufferin County. "It was a combined effort of the community and the citizens of Ontario." BF
Canadian farmland finally getting its due from institutional investors
by JIM ALGIE
The 2013 purchase by Bonnefield Financial Inc. of 6,500 acres, once earmarked for widely-disputed quarry development in Dufferin County, solved a lot of problems for a lot of people.
"We're delighted to have (Bonnefield) because it keeps the land in farming," says retiring North Dufferin Agricultural and Community Taskforce (NDACT) chairman Carl Cosack in a recent interview.
"They have treated us with respect and they have done everything they said they would do," says Cosack who helped rally community objections to the gravel plan.
In the two years since Bonnefield President Tom Eisenhauer and his Ottawa-based partners began pursuing the Dufferin acquisition, they have returned to private ownership 25 homes surplus to the requirements of the prior owner, the Highland Companies. Highland had already demolished several houses as part of early-stage development. Tidying up was Eisenhauer's first order of business after completing the deal in July of 2013.
"When we bought it, there were 6,500 acres, not all of that farmland you and I would want to own," Eisenhauer said in a recent interview at his offices in Toronto's financial district. "Much of it was Class 1, the beautiful farmland that you think of up there . . . and there was a hodgepodge of other stuff," he said.
Saleable houses and other structures have been sold. Bonnefield now has leases with five farmers for the remaining 5,700 acres.
Eisenhauer keeps a "Stop the Megaquarry" lawn sign in his office. He's a sponsor for Food and Water First, NDACT's long-term campaign to improve land use planning and strengthen protection for farmland and water resources.
"I have the luxury of being in a position where our investors want exposure to farmland," Eisenhauer said. "If they wanted exposure to aggregates or to mining, they'd go to somebody else," he says.
Eisenhauer first learned of Highland's decision to withdraw the quarry application in late 2012 and determined their Dufferin holdings could fit his company's plans. He would not disclose the eventual purchase price, but did say it depended on the land's appraised value for farming. When he made the first approach in early 2013, Highland backers at the Boston-based Baupost Group weren't talking.
The Dufferin quarry would have been "a relatively small deal" for Baupost, Eisenhauer says, referring to assets in the realm of $30 billion. Negotiations boiled down to outright purchase and a quick sale.
"We had a letter of intent in April and we closed in July, all under the cloak of secrecy," he says. Baupost insisted on strict confidentiality throughout. "They were sensitive to negative publicity. I don't think people fully understand the extent to which Baupost tried to avoid the limelight," Eisenhauer says.
The window of Tom Eisenhauer's office at Bonnefield Financial Inc. in downtown Toronto looks east from a 17-storey building housing dozens of other investment firms. There's not a speck of farmland in sight unless you count the soil in decorative planters at the office tower's Adelaide St. entrance.
An economist by training with almost 30 years in corporate finance, mostly involving high-tech buyouts, the Bonnefield president is a relatively recent convert to agricultural assets. But Eisenhauer has quickly steered his young company into the rising tide of interest institutional investors are showing in agriculture.
Institutional action in Canadian farmland to date has concentrated on Western Canada. In August, the Canada Pension Plan Investment Board (CPPIB) bought assets of Regina-based Assiniboia Farmland LP worth $128 million, most of it in Saskatchewan.
Founded in 2005, Assiniboia held or managed 115,000 acres and claimed to be the largest farmland fund in Canada. The Assiniboia purchase expands a pension board program aimed at farmland ownership here, the United States, Australia, New Zealand and Brazil.
At the time, CPPIB Senior Vice-President Andrew Bourbonnais described farmland as "an attractive asset class that has historically delivered stable, risk-adjusted returns." Eisenhauer agrees.
Bonnefield investments now exceed $320 million, according to statements published on the company website. Financed through pooled, limited partnership arrangements, all sold to clients directly, the company owns land in all three Prairie provinces, plus New Brunswick and Ontario. The third of three Bonnefield partnerships, which stopped taking new investors in July, is also the first Bonnefield partnership subscribed entirely by "a bunch of Canadian pension funds," although Eisenhauer won't say which ones.
Farmland has been "a huge institutional asset class" elsewhere for years, says Eisenhauer. The U.S.-based Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF) claims $2.5 billion in farmland assets. In 2012, TIAA-CREF created a new $2 billion partnership to acquire even more farmland. Partners include the British Columbia Investment Management Corporation and Caisse de Dépôt et Placement du Québec. Boston-based Hancock Agricultural Investment Group, a subsidiary of Manulife Financial Corp., manages $2.1 billion in agricultural real estate, according to a 2014 Reuters report on agricultural investments.
Eisenhauer figures Canadian farmland is finally getting its due. "I can't tell you much about the future, but I can tell you that in 10 years we are going to be paying more for food than we are now," he says.
Bonnefield partners see the firm as a source of capital for agriculture. Leasing farmers can avoid land debt and concentrate on production. High-cost land and "the coming wave of retiring farmers" creates the company's opportunity, Eisenhauer says.
Through a network of real estate agents and farm consultants, Bonnefield seeks farmers in need of finance, either to clear up balance sheet issues, to expand or to solve generational succession problems.
They use five-year, annually-renewable leases and require strict standards of land management, including crop rotation, water course management and nutrient management.
"I can think of no higher or better use of institutional funding, particularly retirement funds from Canadians, than funding Canadian farmers," says Eisenhauer. "It's a virtuous circle." BF