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Rising farmland prices puts agriculture at risk

That’s what the Senate Committee on Agriculture and Forestry says in a recent report

Higher farmland prices make it harder for young farmers to get into farming and or expand, but they have options, says J.P. Gervais, Farm Credit Canada’s vice-president and chief agricultural economist.

“I do believe now there are more options for young producers in terms of getting involved in different supply chains that don’t necessarily require a large scale to be competitive,” Gervais told reporters April 18 during a briefing on FCC’s 2017 Farmland Values Report.

Gervais was responding to questions stemming from the Senate Committee on Agriculture and Forestry’s report concluding rising farmland prices jeopardize Canadian agriculture.

“Rising farmland prices threaten the viability of the family farm, the future of Canada’s agriculture sector and a traditional way of life for thousands of Canadian families,” the committee said in a March 20 news release announcing the release of its study: A Growing Concern: How to Keep Farmland in the Hands of Canadian Farmers.

Another option is to lease land instead of buying it, he said.

Farmland values in Manitoba and Saskatchewan are close to the historical ratio of land values over farm income, Gervais said.

“History has proven that it’s always been a good thing to work towards building equity in farms,” he said. “To own land has been a good thing for Canadian agriculture.”

The Senate report says “basic economics” is driving up land prices making it attractive for established farmers to sell and discouraging young farmers from buying it.

“Good farmland is being converted for residential and commercial development, Canada’s growing population needs more places to live and farmers are cashing in on their land to support their retirement plans,” the committee’s release says.

The report makes five recommendations to address the issue, including tax reforms and land-use planning changes.

“If the government increased the amount of money established farmers could receive from the sale of their property without having to pay capital gains tax on it, it could make it easier for new farmers to buy land,” the release says.

The current capital gains exemption on farmland is $1 million.

“Also, because many of the reasons for the increasing cost of farmland are related to land-use planning policies, the committee urges the federal and provincial governments to provide funding for research on farmland protection and to enhance the tools used to track land transactions.”

Here’s a summary of the recommendations:

  • Explore increasing the amount of the lifetime capital gains exemption for qualified farm property to make it easier for new farmers to acquire farmland.
  • Continue the co-operation between Agriculture and Agri-Food Canada, Statistics Canada and Natural Resources Canada to improve the data on farmland classification and use of farmland.
  • Better co-operation between the federal and provincial governments on technological advances on soil maps to assist provincial land-use planning.
  • Renew funding on farmland protection to encourage co-operation between provincial land-use planning experts to harmonize land-use planning data for all provinces.
  • The federal government should work with provinces to better track land transactions.
  • The federal and provincial governments should work together to protect and promote the use of land for agricultural purposes.

About the author

Reporter

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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