Leaseholders hardest hit by the 2019 feed crisis will catch a break on next year’s rent — but producers say that won’t erase their financial woes under the new Crown lands system.
On Oct. 16, the province announced a one-time rent credit for Agricultural Crown land leaseholders in the 18 municipalities that announced a state of agricultural disaster last year.
Those leaseholders will get 20 per cent off their 2021 bill, the province has said, assuming they were already holding their lease in 2019 and were forced to weather the poor grazing and dismal forage harvests that year. The credit will be based on the 2021 rental rate.
“You’re renewing your lease again in 2021, there will be an automatic 20 per cent discount taken off of your lease payment due,” Manitoba Agriculture and Resource Development Minister Blaine Pedersen said. “This is to alleviate the feed shortages that happened in those areas and it’s just our way of helping the beef producers in those hard-hit municipalities.”
Why it matters: The province says leaseholders in last year’s driest regions will get a discount on their 2021 rent, although leaseholders themselves say steep rent increases undo a lot of that benefit.
Several consecutive poor feed years came to a head last year, with the worst hits felt in the Interlake and parts of the Parkland. Critically dry conditions burned off pastures early and cut forage yields to a fraction of normal, a situation that was not helped by the tail end of winter earlier that year. Coming off another poor feed year in 2018, many producers had been forced to start feeding cattle early the previous fall or risk stressing pastures, while a cold and dry spring in 2019 had similarly delayed turnout. By fall 2019, many producers were facing down yet another extended feed season, rising hay prices and little forage of their own, leading many to consider deep culls.
The credit translates into about $553,000 in discounts back to Manitoba producers, the province has said. The average producer can expect a credit of about $430.
Leaseholders themselves, however, have questioned how much benefit the credit will provide, given expected rate jumps in 2021.
“We’re appreciative of the fact that they acknowledge that we had problems with the drought there and that current risk management or insurance programs are inadequate to help deal with native pasture and native hay lands, but it’s basically just a token,” Brent Benson, spokesperson for the Manitoba Crown Land Leaseholders Association, said.
The 20 per cent credit “sounds significant,” Benson said, but added that producers are unlikely to pay much less compared to previous bills, even with the credit, since rent is expected to go up next year.
Producers expected a significant rent jump in their next bill, similar to increases seen from 2019 to 2020.
Last year, the province changed the rental formula for forage and grazing Crown land leases as part of sweeping changes to the Agricultural Crown Land system. New regulations changed rents from $2.13 per animal unit month to a new market-based formula, which the province argued would be more transparent, since the formula would be based on easily accessed Canfax data.
Under the new system, a land parcel’s annual forage capacity is multiplied by the three-year average price of 500- to 600-pound heifers and steers, and then further multiplied by a provincially calculated rate of return, currently set at 3.5 per cent.
The new formula was expected to raise rents around 350 per cent once fully implemented, producers estimate.
Producers saw half of that jump this year. The province pegged 2020 as a transitional year, with full rates expected to come in for 2021.
The province argues those increases are necessary to recoup costs, as the previous rate was frozen since 2014.
Leaseholders, however, argued that the sudden jump would shrink already thin profit margins.
Benson said his organization has heard from a number of producers, “who are in pretty dire straits because of this.”
“There’s not really a whole lot of money in livestock to begin with at the moment and these new increases — some of them are struggling to pay last year’s bill and there will be a new one in the mail,” he said.
Carson Callum, general manager of the Manitoba Beef Producers (MBP), says the credit will help “some producers who hold Agricultural Crown Lands in a way, but it won’t help some others.”
Rental rates have been among MBP’s sticking points with the new Crown lands system since new regulations were launched last October. The producer group has pushed for more incremental rent increases, which it argue would lessen the financial shock to producers.
“The rental rate is a pretty steep incline from previous rates and we would like to see a more five-year transition period to get up to that full rental rate, to allow folks to adjust their budgets accordingly,” Callum said.
Extending the rate increases would be “amazing,” Benson said, “but the increase itself is still very high. It’s a twofold problem right now. It’s going to be so high and come on so fast that it will overwhelm people who were close to the edge already.”