When it comes to farmland, the rich get richer and the poor get poorer.
Brooke Rossnagel hopes policy-makers will understand it is in the interest of the sector as a whole to break that cycle.
He wants better access to credit for new farmers, and he’s hoping that a motion with the Manitoba Beef Producers will help pave the way.
Seven years ago, he relocated near MacGregor with thoughts of building up his farm, expanding the operation and hopefully one day handing it down to his children.
Those ambitions have since hit a setback, he says. Skyrocketing land prices have created a hurdle for growth, compounded by competition with larger, established farms when it comes to buying land and what he describes as a frustrating lack of financing options for farmers with less capital.
“It’s got to the point now where there’s only certain people, select few, who can buy the land in the area, which is putting us at a disadvantage and it’s all due to, basically, the financing and the numbers,” he said.
According to the 2016 Census of Agriculture, land and building price averaged $2,700 an acre, up 38.8 per cent from 2011 and Statistics Canada has noted land price as a possible barrier for young producers entering the industry. In Manitoba, those numbers increased 64.5 per cent to $1,900 per acre between 2011-16.
Rossnagel raised the issue with the Manitoba Beef Producers (MBP) during the most recent round of membership meetings across the province. Rossnagel sponsored a motion that MBP lobby for better borrowing tools aimed at new producers.
“We need the government to step in and say, ‘OK, listen. Yes, farms are getting larger, but we need workers too. We need people to do this and we’re losing a lot of our innovation,’” he said.
“There’s so many people who I see that want to do this job. They want this so bad, but they can’t. And they don’t want to work for somebody else, they want to be their own (boss).”
MBP has brought up the issue with government before, but has consistently been told that any solutions must be industry led, MBP general manager Brian Lemon said during the Nov. 3 meeting.
Producer Brett McRae had a different perspective. While McRae agreed that he would like to see more government programs, ones without layers of red tape that he says discourages producers, farmers must also start to rethink land ownership, given the land price increases.
“We need to separate land ownership from land use in that you don’t necessarily have to own the land to use the land as a farm,” he said. “I would agree that you do need to own some land, especially for a home base — to have a yard or kind of a home base for your operation, for sure — but I don’t think the idea that you have to own every acre that you farm is viable in today’s economic times. I think that renting is a really powerful option, and not just for land.”
The producer pointed to equipment, custom work and even livestock that may be rented.
“The big trouble with that is you have to have good relationships, which isn’t easy, especially with a lot of farmers who want to be the lone wolf and do things their own way,” he said. “Building that relational capital is definitely going to be an issue with that, but it’s something that’s going to make the industry better if we get it right.”
Statistics Canada has noted that young producers are more likely to rent than the average farmer. According to 2016 census data, 50.6 per cent of farms where all producers were 35 years old or younger rented land, compared to an average 35.1 per cent of all farms that rented. Farmers relying only on rented land were also younger, nine years below the national average.
Farm Credit Canada regularly requires net worth statements and past financial documents when considering a loan, a possible challenge for new producers without capital and just breaking into the industry.
Craig Klemmer, FCC principal agricultural economist, advised producers to develop a robust business plan to improve approval chances.
“The benefit with FCC is we know agriculture and we want to work with you,” he said. “It’s important when you come in and chat with any of your financial institutions or people that you have a good understanding of what your plan is and understand the cost and opportunities with that.”
Producers should feature any special contracts they have lined up and demonstrate an understanding of their business model and production costs, he added.
In December 2016, Farm Credit Canada announced it was doubling limits on its Young Farmer Loan program from $500,000 to $1 million and dropping the minimum down payment from 25 per cent of the loan’s value to 20 per cent.
The program is geared towards producers under 40 years old with loans attached to special fixed-interest rates or variable rates at prime, plus 0.5 per cent.
For the Manitoba Agricultural Services Corporation, new producer programs have centred around the Young Farmers Rebate (which pays out two per cent of a maximum $150,000 principal during the first five years) and Bridging Generations Incentive.
MASC argues that the incentive lowers down payments through 90 per cent financing or eases the financial stress of starting a farm with five years of interest-only payments.
“With no proven track record or hefty downpayment, a young farmer might not find reasonably priced financing to secure an agricultural loan,” MASC acknowledged on its website.
Klemmer also pointed to transition loans that FCC markets to pass farms down generations.
“At FCC, we continue to want to work with the industry to find products and work with our customers to make sure that we are successful partners in agriculture,” he said. “We have programs that are designed for young farmers, currently, and we’d encourage people to come in and talk with our relationship managers at any time and see if we can put together the right packages for you.”
Other members at the Nov. 3 meeting added that credit programs may be available to new farmers, but are not properly advertised.
Rossnagel says he has also come up against that challenge. In at least one instance, he said, financial representatives were unfamiliar with their own agriculture programs, despite the programs being advertised on their website.
Rossnagel’s motion passed unopposed through the district and will now come before MBP’s general membership during its annual meeting in February.
“It’s going to make some people think, I hope,” he said. “Maybe they’ll go, ‘Wow, there are actually people out there who want to do this who don’t have anything in their pocket, but they have the mind for it, the heart and the innovation.’”