Canada is losing farmland each day. It’s not technically disappearing, mind you, it’s being bought up, levelled, and paved over for new suburbs and shopping malls. It’s also being speculated on, sometimes by surprising buyers — maybe it’s local farmers, but more likely by an investment fund looking to cash in on the seemingly endless inflation of farmland values.
Alarms over heady farmland prices have been going off for some time. There are a multitude of concerns all converging under the heading of “protecting farmland.” Development of high quality land is one concern, the inability for new or young farmers to buy land is another, and both of these issues are made worse by non-farmer ownership driving up land prices.
In late 2016, Canada’s Standing Senate Committee on Agriculture and Forestry was tasked with “examining and reporting on the acquisition of farmland in Canada and its potential impact on the farming sector.”
That report was released this week. In it, the committee recommends that:
- The Department of Finance Canada explore the possibility of increasing the amount of the Lifetime capital gains exemption for qualified farm property to make it easier for new farmers to acquire farmland;
- Agriculture and Agri-Food Canada, Statistics Canada, and Natural Resources Canada continue to cooperate to improve the data on the classification and use of farmland; and, federal departments better cooperate with provincial departments in order to keep them informed about technological advances in imaging and remote sensing, and the way in which the resulting soil maps could assist provincial land-use planning;
- Innovation, Science and Economic Development Canada renew the funding for the national research project on farmland protection through the Social Sciences and Humanities Research Council. This renewal would encourage cooperation between provincial land-use planning experts and support the development of standardized analytical frameworks and tools that would enable harmonized land-use planning data to be obtained for all provinces;
- The federal government work with its provincial counterparts to take advantage of initiatives such as the national research project on farmland protection, in order to enhance the tools they need to better track land transactions; and,
- The federal and provincial governments work together to protect and promote the use of land for agricultural purposes.
What new regulations or changes to existing rules these recommendations evolve into remains to be seen, but the impetus to do something is stronger than ever. Of note, when this report was written, owned land was pegged at 74% of farmed land based on the 2011 Census of Agriculture. The 2006 numbers suggested a dramatic shift — only 61% of farmed land was owned. That figure is a reflection of an aging demographic to be sure, but also reflects land bought up but not yet developed and land bought by speculators. This stat should ring alarm bells for those that deem loss of farmland an issue.
The report details potential action items related to some of the recommendations. Looking at what’s already out there, the report highlights provincial tax deferral programs, funding for land clearing, the importance of land financing programs, and common land-use policies between levels of government as key elements of protecting farmland.
There is a call for further restrictions on non-Canadian ownership or tightening up provincial rules on land ownership. Some are calling for all-out bans on development of Class 1, 2, and 3 farmland. But we know that greenbelts and land reserves carry their own tradeoffs and challenges — many farmers are using land appreciation as their sole retirement plan. For those nearing retirement, there’s not much time and possibly cash flow to shift investment off-farm.
From where I sit, literally able to see Quebec from my window, we know that land use restrictions keep farmland values down — a bonus for anyone trying to start a farm, but what’s to be done for those banking on selling to a developer to fund retirement? Most of us want farmland preserved, but in the same breath don’t want to be told what we can and cannot do with our owned property.
If you’ve got a solution, I’m all ears. Zip me your thoughts at [email protected]