Farmland ownership: more farms in fewer hands

Tuesday, April 6, 2021

Is there equality among prairie producers?

By Taryn Milton

Western Canada is celebrated as the breadbasket of Canada, with more than 70 per cent of the country's farmland within Alberta, Manitoba and Saskatchewan.

But who really owns most of this land? And how is this changing?

In November, the Manitoba office of the Canadian Centre for Policy Alternatives (CCPA) published a report titled Concentration Matters: Farmland Inequality on the Prairies.

"The main purpose of the report was to take a look at the changing land tenure patterns on the Prairies. One of the things that we were very interested in looking at was whether or not land was being concentrated in the hands of fewer people," says Dr. Annette Desmarais, co-author of the report.

Desmarais is an associate professor in the department of sociology at the University of Manitoba and is the Canada research chair in human rights, social justice and food sovereignty at the university.

This month, we explore the information presented in the CCPA report, discuss the topic of farmland ownership with farmers and researchers and examine some related issues.

Study the data

The CCPA report reviewed Statistics Canada census data from 1966 to 2016. The change in the number of farms during this time was especially interesting.

Census data reported that in 1966, Manitoba had 39,747 farms, Saskatchewan had 85,686 farms and Alberta had 69,411 farms. In 2016, the number of farms on the Prairies had decreased dramatically. Manitoba had 14,791 farms (63 per cent fewer operations), Saskatchewan had 34,523 farms (a drop of 60 per cent) and Alberta had 40,638 farms (down 41 per cent).

"The report is yet another reminder that every year there are fewer and fewer farmers farming. That means that every year, we continue to lose farming families and while that is happening, farms are getting larger," Desmarais tells Better Farming.

The report, co-authored by Darrin Qualman, Dr. André Magnan and Dr. Mengistu Wendimu, also proposes there should be concern for growing inequality of farmland ownership on the Prairies.

Dr. Eric Micheels, an associate professor in the department of agricultural and resource economics at the University of Saskatchewan, wouldn't go as far as saying there's an issue of inequality.

"I think in some sense, that's kind of the nature of commodity industries, where it is a game that's built on efficiency and using resources to acquire those productive assets. So, I guess I wouldn't necessarily categorize it as inequality, but there is certainly a discrepancy in the size of farms that run that land," he tells Better Farming.

The conversation about farmland ownership also raises a question of how accessible land is for younger farmers trying to acquire acreage.

Rauri Qually is a grain and oilseeds farmer near Dacotah, Man. He's 34, a fifth-generation farmer and farms with his wife Pam Bailey. His dad Gerald Qually farms separately but helps when needed.

Qually started farming in his late 20s, a little later than some farmers, and has experienced a struggle with buying land.

"I saw the sharp increase in farmland values when I first entered into farming, and knew that farmland was going to be difficult to acquire, but I didn't know for someone in my situation it was going to be almost impossible, unless through inheritance," he tells Better Farming.

The cost of farmland in the Red River Valley area where he farms has increased almost 600 per cent since Qually began farming. This means when land becomes available, which isn't very often, it's hard for small operations or young farmers to purchase it, says Qually.

"If (farmland is) up for sale, it can get snatched up very quickly or it stays on the market for a very long time. But the price that owners are after is not feasible for a young farmer like myself. So, usually you get more established farmers absorbing it into their operations," he says.

For young farmers, it's important to be able to build capital, but the availability and price of farmland has become a barrier, says Qually.

"As a young farmer, just like any other farmer, we want to be able to build capital, buy new equipment and be productive members of the community. And just like any other business, we need to be able to buy and sell inputs and sell our grain. But when an asset that you require is so expensive, it doesn't matter what commodity you grow on it – it wouldn't even make the interest payments – then there's just no sense in trying to buy it," Qually explains.

John Guelly agrees that buying farmland is a struggle. He is a grain and oilseeds farmer near Westlock, Alta. He farms with his wife Shelly, kids Matt and Kristen, and gets help from his dad Elmer.

Guelly is 53 years old and has been farming since 1993. He's experienced difficulty trying to purchase land in his area since a lot of land is already spoken for.

"Like the old saying goes, 'They don't make land anymore,'" he says. "It seems to be a matter of waiting for somebody to retire to get access to land and typically they want to hang on to ownership of it. So, renting is usually the way to get access to the land. And if you're lucky, maybe when they decide that they're finally going to sell the land, if you're renting, you may get right of first refusal on it."

Renting farmland can be a good way to increase the number of acres you farm, but renting has pros and cons.

"Some rental situations work well if you have a good landlord. But I find it's a lot nicer to own it so that how you treat that land is a long-term plan and a long-term decision as opposed to having a two-, three-, four- or five-year rental agreement where if you don't get a chance to rent the land again … there's not a lot of incentive to leave it in much better shape than you received it in," Guelly explains.

Jake Ayre is a 24-year-old pedigreed seed and cash crop farmer in Minto, Man. He farms with his dad Andrew, mom Heather and sister Caitlin.

Ayre views renting land in a different light.

"I think there's a mindset that in order to farm farmland you have to own it. However, in my life and people I know and work with, I'm seeing and I truly believe you don't need to own farmland to farm it. For sure there's a moral risk with a lease or rental agreement, but as long as you change your mindset, you can almost open more doors," Ayre tells Better Farming.

Ayre has had some good experiences with renting and believes if you're renting land and want to make changes, it never hurts to simply ask the landowner.

Community impact

While renting is a good option if you don't have the opportunity to purchase land, the issue of fewer farmers holding more land brings forward other potential problems in rural communities.

"If young farmers can't buy land, or even rent land, youth leave. The report showed that in the last generation, about 70 per cent of youth have left the countryside and have gone to work in urban areas. There just simply isn't the opportunity for them. We sit around and we wonder why our tire shops are closing, why the restaurant in town is shutting down, and the hardware store isn't operating. Well, it's because the youth have left," Qually tells Better Farming.

When the farmland belongs to a farmer who doesn't live in the area, this affects the rural community, says Qually.

"We're noticing that, especially in our municipality, we're seeing farmers who are from 50 miles away, for example, coming and farming a bunch of land here in this municipality. They don't hire anyone local, they don't buy from local suppliers and this is wealth leaving our community every single year," he says.

Guelly also sees small towns hurting.

"The tiny towns are just about extinct, and the smaller towns are really struggling. So, if we start losing those, I'm not sure where we go in agriculture. For a lot of the parts and supplies that you need to buy for the farm, you can't go to Edmonton and buy them. They don't have them at Home Depot and Lowe's," Guelly tells Better Farming.

Desmarais is also hearing this concern for rural communities in another project she's working on with some master's students across the Prairies who are speaking with farmers on the issue of farmland ownership.

"Farmers, by and large, are deeply worried. They're worried about what's going on because they see as fewer and fewer farmers are living in the areas and in the surrounding areas, then more schools are closing, and more services are not available.

"That means more driving for them, driving their kids further away for all kinds of social activities and social services," she says.

Solutions

No single solution can address the issues that farmland ownership inequality brings up, but some were brought forward in the CCPA report.

"We need to start developing some policies that actually help to get young people farming and make sure that there are policies that ensure those young people are able to keep farming. I think that means looking at perhaps reshaping some of the farm support programs that we already have," says Desmarais.

The programs that are currently available are tailored to more well-established farmers and yet we need policies that target new and younger farmers in those policies, says Desmarais.

Micheels agrees.

"There are programs available for young farmers to have some reduced interest rates on farmland loans and whatnot and that might be a program to continue into the future," he says.

Qually also agrees that more incentives for young farmers is a good thing. Programs for retiring farmers may also be beneficial.

"When farmers are retiring, they are faced with some pretty difficult choices. Maybe they want to rent out to a young farmer down the road, but when that large farm comes into the yard with a blank cheque for their land, and you've got to pay capital gains tax in order to give this young farmer a chance at your land, you have to make the best business decision possible for yourself at the end of the day," he explains.

Ayre agrees that there could be more opportunities for younger and retiring farmers to work together.

"I'm hearing that more and more people are in crop-share agreements. Maybe there's that retiring generation that's looking to get out and they still want to have a foot in the door, so to speak, and there's an opportunity there. People are doing crop shares, they're sharing labour, they're sharing resources, there are alternative methods," he says.

Another idea, which is controversial, would be imposing a limit on the amount of land anyone can own.

"That's a big issue because a lot of people would have problems with that. But in Prince Edward Island, that's what they do, and it's been working for them. So, we should maybe look at that carefully to see what the benefits would be. It comes down to the question of whether or not we want a whole lot of people farming or if we just want fewer," says Desmarais.

A lot of farmers feel pressure to increase the size of their operations in order to survive, but the CCPA report showed that may not be the case.

"What our research showed was that we really need to do a lot more research on this assumption that big farms are so efficient and so profitable. Because according to our figures, actually, they're not," says Desmarais.

The report specifically examined Saskatchewan's data, so figures may differ by province, but when comparing larger producers to smaller ones, the report showed the dollars of output per dollar of inputs where relatively the same, says Desmarais.

"We found that it's largely the same across all scales. It's about $1.30 of output per $1 of inputs," she says. "We're kind of trained to think it's just going to get better, the bigger you get. Well, it seems that we need to rethink that."

Another potential solution to farmland ownership inequality is looking into stricter tax laws for non-resident farmland owners, says Qually. He also suggests legislation that mandates a minimum number of farmers in a specific area.

"This is yet another planning solution to keeping a minimum number of farmers working within a province or in a region," he says. "We could have a minimum number to keep these farm communities and economies working, instead of one farmer buying up the entire township that's from 50 miles away, who doesn't really contribute anything to that area.

"Having land purchasing power only available to a select few, in my opinion, is a terrifying concept. It's reminiscent of a past where only a few wealthy people could own land and everyone else toiled to farm the land. My ancestors came to Canada because anyone could own land if they were willing to work it," he says.

Moving forward, many options may be considered to address the issues that are brought up surrounding farmland ownership and there is reason for optimism.

"I like to think that there's always a way around the problem and it's not a roadblock. If you rejig your thinking, challenge yourself or seek outside counsel or help, any problem can be overcome," says Ayre. BF