Provincial Ag Scene - Summer 2017

July 14, 2017

The Changing Structure of Farmland Ownership

Recent results from Statistics Canada's 2016 Census of Agriculture have been released and provide an updated portrait of the Canadian agriculture industry. The findings include:

·        A reduction in the total number of farms (-5.9%)

·        An increase in land used for crop production (6.9% or 6.03 million acres)

·         An increase in the average age of farmers (now 55, up from 54)

Another important observation from the Census was the breakdown of farmland use arrangements across Canada. The Census recognizes five different land structure arrangements for total farmed area: owned land, leased from governments, rented or leased from others, crop-shared from others, or used through other arrangements. The breakdown of Canadian farm land usage in 2016 is shown in the figure below.

Ownership is clearly the most prominent form of farmland use arrangement in Canada. Not surprisingly, rented land follows as the second most common. What is interesting to note is how these farmland arrangements have changed since the last Census survey in 2011. Across Canada, the percentage of area owned has fallen 1.82 per cent and the percentage of rented land has increased 2.25 per cent. This is an important shift in the structure of farmland use. One potential explanation is the increasing tendency for retired farmers and their families to keep their land and rent it out as opposed to outright selling it.

This trend was analyzed on a province-by-province basis to determine if this pattern was experienced nation-wide. The map below outlines the changes in farmland use arrangements for each province from 2011 to 2016.

The provincial breakdown shows a substantial rise in rented or leased land in the majority of provinces as compared to the 2011 Census results. Eight of the ten provinces show increases with the largest in Saskatchewan (3.78%) followed by Alberta (2.06%) and BC (1.55%). Correspondingly, the proportion of owned farmland has fallen in most of these provinces as well.

These changes amount to an increase of 3.2 million acres of rented land across Canada. More specifically, it amounts to 2.3 million acres in Saskatchewan, 0.98 million acres in Alberta, and 44,000 acres in Manitoba. Similar trends can be noted in the results from the previous two Census periods.

As the amount of land being rented expands in Canada, the need for farmland management increases. At FNC Serecon, we believe that farmland is a valuable and secure investment that provides good returns to the owners. We give non-farming land owners the peace of mind their land is being responsibly managed and protected. By actively managing the relationship with the renter, we ensure fair rental rates for all, and acceptable farming practices that sustain the health of the land. We provide land owners better control for their farm and consistent communication about what's going with it, preserving their connection to the land.

Who Makes Appointments?

The 2016 Census of Agriculture asked farmers if they have a written succession plan. Of 193,492 farming operations, only 16,300 reported that they have a formal plan laying out how their farm will be transferred to the next generation. Looking at it a different way, 178,000 Canadian farms have no written transition plan. That's cause for concern. In the transfer of farms between generations, families should be able to go through the process with a minimum of anxiety and conflict.

To come up with solutions, it is important to have an idea of causes of the problem. It may be part of the culture of farm families. It may be resistance to investing the time and money required. Perhaps it is because the potential consequences of an inadequate plan are not well-recognized. Some believe a key reason for this lack of planning is the male farmer, commonly known as Dad. He would rather be doing anything else but spending time with lawyers, accountants, or financial professionals planning for a time when he won't be around.

It often comes down to "who makes the appointments". That person is likely the farm wife, also known as Mom. She makes sure Dad gets to the doc for his annual checkup, she reminds him of all the family celebrations and events, and generally organizes everything that isn't directly related to farming operations. An additional item that Mom can handle is to make an appointment for she and Dad to see a professional that can provide the outline and first steps of an effective transition plan. Dad may not like it to start with, but he and the entire family will thank Mom for her persistence in getting the ball rolling on a proper transition plan.

Renters Looking for Land

In our travels around the prairies, we talk to a lot of landowners, more and more of whom are making their land available for rent. As some farmers scale back or retire, they're renting out some or all of their land, or are giving up land they have rented for years. Other people we encounter are non-farmers who have inherited land - they need help finding a renter or don't know what a fair rental rate would be.

In any case, more rental land is coming onto the market in most areas. You may know people who are in that very situation and do not have the time, energy or inclination to identify a new renter themselves. Throughout the areas where we manage farmland, we are in touch with a number of farmers who are looking for land to rent. If you or a client have land they need to rent to a responsible and capable steward of the land, we may be able to help. Call Trevor Birchall at 403-216-2113 if you would like to have conversation about it.

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.