Provincial Ag Scene - January 2018
January 15, 2018
Transition Plans - Sell the Land or Rent it Out?
By now you may know our
primary focus - managing farmland for absentee owners, the majority of whom
have inherited land from their farmer parents. When we explain what we do,
virtually everyone has the same response: "I had no idea that service even
existed". When we tell them about the increasing average age of farmers and
their kids who won't be farming the land they inherit, the next response is: "I
can see the need for your service. It makes total sense."
Farmland management is
not a new idea, but hasn't been widely offered in Canada. In the US and in
parts of Europe, it has been going on for generations, and it works well for
both landowners and renters.
With farming in western
Canada being generally profitable for a number of years, not all farmers need
to sell their land to fund their retirement. As a result, more land is being
passed along to heirs, and partly due to the substantial rise in land values,
things are a bit more complicated now. Ideally, good transition plans are in
place to provide a smooth transfer of the asset, but that's unfortunately not common.
According to the 2016 Census of Agriculture, only 8% of farmers have a written
succession plan, so farmland inheritances often introduce issues such as tax consequences
and family dynamics. This situation can change if more farm families engage
professionals to help them plan a smooth transition, but that's a discussion or
another newsletter. For heirs receiving farmland, a key decision arises: Do I
keep it as a revenue-generating investment, or sell it?
People inheriting their
family farms are often not involved in the ag industry. They have limited
knowledge of what constitutes fair rent and good land stewardship, so they rent
out the land and hope for the best. Few farmers rent land with the intent of
abusing it, yet you do hear stories about absentee landowners who lose sleep
over their farmland. Possibly that's because they feel they are not in control
of an extremely valuable asset, even if they have great renters. A growing
number of absentee landowners are turning to professional farm managers to look
after their land for them. Their objective is to keep this hard-to-replace asset
as an investment they can feel good about.
After considering the
pros and cons, there can also be good reasons for farmers or their heirs to
sell their land. It's common for buyers and sellers to agree to land transactions
over the kitchen table. But some sellers need help to ensure they get the best
price for their farm, for the benefit of themselves and their families in the longer
term. In those cases, it makes sense to involve a real estate professional.
comprehensive knowledge of prices in the area, the ability to negotiate without
letting emotions get in the way, and sound advice on important components of
Seeking advice from farm
transition planning professionals makes a lot of sense. In similar fashion,
it's worthwhile considering help from farm real estate professionals, whether selling
land or renting it out.
Please pass this newsletter along to anyone that
it may help, or point them towards a digital
copy in Landowner News on our website. If you'd rather have a conversation
about farmland management or land sales, please call Jim Robinson at
for Land Rental Agreements
After a largely
successful harvest across western Canada, many farmers and landlords turn their
attention to land rental arrangements. That can include a number of different
Some folks will be
renegotiating leases to bring them up to date with the current market, while
others will be extending leases without change. In some cases, arrangements are
restructured - for example, changing from cash rent to crop share, or to a
production joint venture. For farmers who have decided to downsize or retire
completely, the land they had been renting comes available for others to have a
turn at farming it.
For retired farmers
living close by and renting out their land, this is a familiar process. For
non-farmer landowners who live away from their property, updating lease
arrangements may not be so easy. When landlords aren't closely connected to the
ag industry, it can be challenging to know the most current rental rates or agronomic
practices. An option for them is to engage a farm management company to
negotiate and collect fair market rent, and keep them informed about what's
happening on their land.
Having a professional
look after any valuable asset provides peace of mind and a greater ability to
hold onto your property for as long as you choose.
If you'd like to know more about how farm
management works, give Trevor Birchall a call at 403-216-2113 for an informal
Increasing Pulse Rate of Prairie Ag
From time to time,
you'll hear someone in the agriculture business talk about pulse crops or
pulses. If you're not closely connected to the business of farming or agri-food
production, you may wonder what that means. Pulses are part of the legume
family, the most common varieties being dried peas, edible beans, lentils, and
chickpeas - the word pulse actually refers to the dried seed of the plant. As
part of the legume family, they fix nitrogen in the soil, reducing the need for
From a consumer
standpoint, pulses can be a tasty and nutritious part of any diet. They are low
in fat and high in protein and fibre, and have high levels of other nutrients
such as phosphorous, iron and zinc, plus B-vitamins such as folate, niacin, and
thiamin. In addition to their nutritional qualities and association with
improved health, pulses can reduce the environmental footprint of the food we
buy. It's easily defined as a sustainable crop, contributing to the wellbeing of
the consumer, the environment, and the producer.
The worldwide demand for
pulses as food is large and constantly growing. Many countries depend on pulses
for a large part of their nutrition every day, and along with their rapidly
growing populations grows the demand for pulses. For example, India, at roughly
a billion people, adds about 37 million people every year, roughly equivalent
to the population of Canada. With such market growth there and in the more than
120 countries that buy pulses from Canada, the future of this crop and the
profitability it brings to prairie farmers is promising.
For additional information about our land
management and real estate sales services, or to discuss how our services could
benefit you or your clients, call Jim Robinson or Trevor Birchall at (780)
448-7440 or visit FNCSerecon.ca.