Dale Myhre had plans to expand his ranch near Crane River, before the province announced its new approach to agricultural Crown lands. Now he’s wondering if he is going to lose his farm.
The new regulations shortened lease terms from 50 years to 15, removed unit transfers (except in the case of family transfers), cemented allocation by open auction and changed forage and grazing rent values to reflect cattle markets, among other changes.
“Some of the producers, when they got the announcement, they couldn’t sleep that night because they could see the writing on the wall for their ranches,” Myhre said. “The problem with the ranches in this area is that the majority of their land is Crown land and they’ve been operating that for generations as a unit that is in their family and they expect to carry on with that unit with their families.”
About 90 per cent of Myhre’s ranch is tied up in agricultural Crown land leases.
It’s a recipe that northern ranchers say may spell the end of their farms, unless a first right of refusal is added. Leaseholders should be given first chance to renew rather than being forced to outbid all comers every 15 years, they argue.
“If we had that for these ranches that rely so much on Crown land, we would be off to the races,” Myhre said. “We would be able to manage and be able to invest in these ranches because we would have a future, but if we have a 15-year lease that we’re going to lose, we just can’t build new fences and develop land and care for the land because we just know that down the road it’s probably going to be gone with someone who comes along and has more money than we do.”
Farmers may have until 2034 until the full effects of that 15-year term are felt. A grandfather clause has been included in the regulations, which allows for one renewal of a lease with a term ending no later that Dec. 1, 2034. Likewise, leases and permits already issued before the regulations came out can be transferred according to their original terms.
Pressure from outside?
The province previously argued that the open auction itself would help protect against sudden newcomers sweeping in with deep pockets and outbidding the locals, since bidders would only pay what land is worth.
Regulations do require that all leaseholders be actively managing land, undercutting fears that large corporations might buy up Crown land leases in bulk. Local ranchers, however, argue that large ranchers from outside the area could still raise the bids to the point that they are unaffordable.
Producers have also raised concerns that the bulk of Crown lands will come up for auction at the same time in 2034, opening the door for a large bidder to come in and sweep up leases en masse.
“If all of the Crown land comes up at once, a producer who has a lot of Crown land is going to be very vulnerable and he could lose his whole base all in one year,” Betty Green of Fisher Branch said. “Likewise, for somebody who wants to come in and acquire some Crown land, it’s a haven for an opportunity because there will be so much available. In areas it’s not going to be patchwork. It’s going to be whole tracts.”
The province argues that in-person bidding and local marketing will offer some protection, although ranchers argue that proxy bids largely negate that.
“Say (the auction’s) in Steinbach, for example,” Agriculture Minister Ralph Eichler said. “We’re only going to be advertising in Steinbach and it’ll be in Steinbach. If we go to The Pas, it’ll be in The Pas. It’ll be advertised in The Pas. This is not something that we’re trying to get producers in Steinbach to go and lease land in The Pas.”
Calls for first right of refusal were loud during a leaseholder’s meeting in Ste. Rose du Lac Oct. 2. Over 350 farmers from around the Parkland and Interlake came to express their outrage with the new system at a hastily organized meeting and to discuss a future course of action.
Attendees expressed frustration with the province, including accusations that the province had ignored their previous feedback.
“To be quite frank, I think there are a lot of farmers and ranchers in southern Manitoba who have the government’s ear. We obviously don’t,” Arvid Nottveit of Peonan Point said.
About 9,600 of his 10,000-acre ranch along Lake Manitoba is leased from the Crown, and he must travel through leased land to access his private land, making the lease integral to his farm’s value.
Nottveit argued that the new policy does little to increase Manitoba’s cattle herd, something Eichler pushed over his last term.
“Any improvements to improve the economic viability and increase the carrying capacity of that chunk of land that I manage for the Crown, I bear all those costs. Under this new system, I’m not guaranteed that I’ll get paid for those improvements if I lose the lease,” he said.
The regulations allow for 30 days after the end of a lease to remove investments made to the land, as well as a mechanism to negotiate for payment with the new leaseholder. Producers like Green, however, say they are wary of that system, particularly when applied to fair payment for land and soil improvements.
Legal action was not ruled out at the Oct. 2 meeting, although calls for the Manitoba Beef Producers to engage with the province on producers’ behalf were also strong. Attendees also considered getting the Association of Manitoba Municipalities involved, given the potential impact to communities.
“If we’re all chased off of our farms, our community is done,” Brent Benson of Lake Winnipegosis said. “There will be no curling rinks, no skating rinks, all the things that you’re involved in, 4-H and that. It will just be decimation for our communities up here.”
A clear miss
MBP submitted a position to the province this spring, echoing many of the concerns currently in the limelight.
MBP favoured some of the regulatory changes, such as increased lease enforcement and the auction system. The new regulations also remove a 4,800 animal month unit cap, something that has been generally welcomed by ranchers who argued that cap no longer reflects herd size.
MBP did, however, also highlight the need for continuity in their spring submission, something that general manager Carson Callum says is, “clearly a miss,” in the new regulations.
“We have pushed that in conversations and negotiations already with provincial government because we know that access and predictability is really essential for long-term planning related to these livestock operations,” he said.
Benson described the system as a constantly renewing countdown clock, in which the entire future of a farm is left in limbo every 15 years. The allowance for family transfers is of little comfort when most of the land he relies on could be suddenly swept out from under his feet if he can’t outbid the competition, he said.
About 95 per cent of his farm is Crown lands. Benson had plans to improve his rotational grazing and fencing on the land, but those plans have since been scrapped.
“I’m not going to risk tens of thousands of dollars in order to make it nice for someone to take it from me,” he said. “That would be an insane investment. No bank would lend me money to do that kind of a thing.”
Financing also emerged during the Oct. 2 meeting. Steve Ganczar, of the Dauphin branch of Catalyst Credit Union, urged producers to put a number on what they stand to lose while lobbying the government.
“This sucks because, let’s face it, the cost of production is insane,” he told attendees, noting that their previous advantage lay in the accessibility of cheap Crown land.
The local credit unions, “are listening and we are concerned,” he noted.
Manitoba Agriculture Minister Ralph Eichler says he has met with the Manitoba Beef Producers since the regulations were released, and has heard its concerns.
“If there’s a way to make it better, we’re going to do that,” he said. “This is about ensuring that we have sustainability and predictability for those Crown lands and then we enhance it for young producers and those existing producers.”
The province has previously argued that the new system will be more accountable and transparent, as well as freeing up previously moribund leases and ensuring that leased land is being effectively used.
Eichler has not discounted the possibility of adding first right of refusal into the regulations.
His department will be at each Manitoba Beef Producers district meetings at the end of October and beginning of November, he said.
“I can’t sit down with all of the leaseholders as individuals, but I can work with their beef producers’ organization in order to ensure that we get it right and they get it right,” he said. “Individual cases will be done, but the broader scope of policy will be set by government and then we’ll do the individuals.”
Eichler discounted “backroom conversations,” which he says are fuelling much of the producer anxiety and making the impacts of the policy sound more negative.
Help or hindrance?
Young producers were among the province’s main arguments for shorter lease lengths. The province argued that the previous system tied up Crown lands for decades and kept them inaccessible to new producers looking for land.
Ranchers, however, are less convinced. Myhre argued that the auction system would keep winning bids out of reach for young producers, the new rental formula would increase costs for those young producers and that the new system would offer little certainty for a long-term future in establishing a farm. Ranchers echoed those sentiments days later in Ste. Rose du Lac.
Ranchers are also bracing for a jump in rent.
Rent for existing leases will go up for the 2020 season, and increase yet again in 2021 as the new formula comes fully into force.
The new rental formula takes the average market price per hundredweight for 500- to 600-pound steers and heifers over the last three years, multiplied by the land’s forage capacity in animal month units and a 3.5 per cent rate of return. That rate of return is based on the public access, tax burden, farmer improvement costs and the environmental goods and services offered by Crown lands and will be regularly re-evaluated, the province says.
Rates in 2020 will average current values and the new formula for the sake of farmer transition, the province has said.
The province previously argued that the $2.13 per animal unit month it charges now is low compared to other provinces and must go up to recoup administration costs.
Farmers, however, are less than impressed by the promised jump, even considering the transition year.
The new rate will not only be higher, but exponentially higher, rancher Rae Huber said, while ranches will only have 30 days after their fall notice to come up with the extra cash for the 2020 jump.
“We’re basically going to have 30 days to come up with a pile more money in a market where we’re all suffering from drought and then too much rain, having to sell our cattle down because of the situations environmentally and it’s going to put so much strain and unfairness on producers. I don’t know what our government’s thinking,” she said.
The Manitoba Beef Producers say that it is pushing for a fair rate and realistic transition period to the new formula.