Crown land leaseholders eye legal challenge

Forage leaseholders have started the legal wheels turning in their ongoing spat with the changed Crown land system

After Crown land changes were announced in 2019, producers flocked to a public meeting at Ste. Rose to express their concerns.

The organizing voice for Manitoba’s Crown land leaseholders is considering whether they can take the provincial government to court.

The Manitoba Crown Land Leaseholders Association now says they have raised almost $28,000 for a potential legal challenge against changes to the Crown land system.

“We’ve basically raised enough to start the process with the lawyer,” Brent Benson, spokesperson for the association, said. “They’re doing a discovery phase right now and investigating the claims that have been put to them by our legal committee.”

Why it matters: Tension sparked by changes to forage and grazing Crown lands has been running high since fall 2019.

The discovery phase had been ongoing for about a week as of Jan. 13 and has been looking at quantifying damages that producers claim have been caused by the Crown land system overhaul, Benson said.

The province introduced widespread changes to forage and grazing Crown lands in 2019, arguing they would modernize the system to be more transparent and easier to understand.

As well as enshrining Crown land allocation by auction — replacing the previous points system — new regulations dropped lease lengths from 50 years to 15, introduced a new market-based rental formula and eliminated unit transfers outside of family — which had previously allowed a producer to transfer lease rights with the sale of a ranch — among other changes.

Following rancher outrage — with producers highly reliant on Crown lands arguing the shorter lease and open auction was tantamount to putting the majority of their farm on the line every decade and a half — the province promised to add a right of renewal allowing legacy leases to turn over to the same owner without auction.

That amendment was released fall 2020, including a clarification that the right of renewal would be transferable to family. Producer groups, including Manitoba Beef Producers and the leaseholders’ association, said the incoming right of renewal would protect business consistency and long-term planning, although Keystone Agricultural Producers also raised concern that the change might create a tiered system where legacy families gained advantage over new leaseholders.

The system overhaul has sparked tension between northern ranchers and the provincial government. Leaseholders have argued that the shorter terms make it hard to secure financing while also causing considerable concern over recapturing the value of land improvements.

The removal of unit transfers has caused similar strain. Producers argue that some ranchers owe the bulk of their land base to leased land and carry little value otherwise, while the province argues that ranchers were using unit transfers to artificially increase their private land value.

Agriculture and Resource Development Minister Blaine Pedersen has since compared unit transfers to any other ag land rental, which he argues producers would not expect to be able to carry over when selling their farm.

Rent has also emerged as a flashpoint. The new rental formula promised to raise rents over 300 per cent, rolled out over two years.

That rental curve was too sharp and has left ranchers struggling to pay those bills, producers have argued. Both the Manitoba Beef Producers and leaseholders’ association have previously pushed for a more gradual climb.

Pedersen, meanwhile, argued that rents have been frozen for years and that increases are necessary.

“Lease rates on Crown lands were set to increase in 2014, but the previous government failed to implement the rate increases,” he said. “As a result rates were held artificially low. Part of the program modernization, which has had impacts on lease payments, was to ensure that Manitobans were realizing relevant value for the private use of this public asset.”

In 2020, the province announced 20 per cent rent relief for 2021 in the 18 municipalities to announce states of agricultural disaster in 2019.

The elimination of a transitional unit transfer in the 2020 amendment has also caused considerable ire. Leaseholders argued that they had been promised one last unit transfer when new regulations were first introduced and that losing the transitional measure cut the legs out from retirement plans.

Pedersen has since argued that the transitional measure was never active.

Unpopular or actionable?

Among the top of the priority list of the discovery, Benson said, is what the association describes as the “wiping out of the assets and equity.”

Benson said they are also investigating whether the rate of rent increases is legally actionable.

Pedersen said he will not comment on a potential legal challenge.

Calls for legal action first emerged in fall 2019, immediately following the original release of new Crown land regulations. At the time, industry leaders urged producers to adopt a more moderate route.

A proposed legal challenge got a sudden groundswell of support, however, once producers received lease invoices in late 2020, Benson said.

“As soon as they were received, there was an immediate outpouring of distress from producers,” he said, adding that many were still reeling from another Crown lands rent bill last spring.

“It basically came to a head here,” Benson said. “The calls were very loud and they were the grassroots swell — not from our board. It actually came from producers who want to push this approach. They felt that the changes that were made were unfair.”

The association has previously pushed anecdotal stories of members struggling to pay their bills or considering the sale of livestock to make ends meet. They do not, however, have hard numbers on leaseholders possibly facing a loss of lease.

“It’ll probably be the next 60 days here where we’ll find that out,” he said, pointing to the end of the accepted pay period for the current round of bills.

Benson anticipates a significant number of lease surrenders once that grace period ends.

Pedersen says his department, “continues to consider payment extensions for the 2021 invoices upon request for those in extenuating circumstances.”

About the author

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Alexis Stockford

Alexis Stockford is a journalist and photographer with the Manitoba Co-operator. She previously reported with the Morden Times and was news editor of  campus newspaper, The Omega, at Thompson Rivers University in Kamloops, BC. She grew up on a mixed farm near Miami, Man.

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