Prairie land has its advantages

On a recent television program there was a report on inter-generational transfer of farmland.

It is an issue which has gotten some attention in the media, but perhaps less than it deserves, depending on what future someone has for the farm sector.

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There are those who simply aren't worried about who ends up owning land moving forward.

It's not like many people fear that there will come a time no one wants the land. In fact, the reality is likely quite the opposite.

Land with the capacity to grow crops, or raise livestock, is a finite resource on this planet, and with an ever-expanding population, it has a value which cannot be over-looked.

Sitting on the Canadian Prairies, the land has several advantages which have to make it attractive moving forward.

It is currently some of the lowest-valued land in the mechanized farming world. That has made it attractive for a new generation of immigrant farmers from Europe who are selling small holdings in countries such as England and Denmark, and coming here to buy larger acreages.

In Europe farm land is often being purchased strictly as investment property with absentee landlords.

As we move forward that is likely to occur here on a larger scale than it is currently.

And, there is a likelihood of at least some interest in corporate entities with interests in related agricultural enterprises to at least consider adding active farms to their portfolios.

So, finding a willing buyer for land, in particular larger holdings, is not likely to be an issue moving forward.

That said, it does add pressure to the idea of a farm transferring from one generation to the next, something many see as important in terms of the idea of the family farm.

Farming in Canada is actually one of the industries with the oldest average age of participants, currently sitting at an average age past 50. It is a number which suggests within the next decade, many farmers will be looking at moving into retirement.

But, how does a son, daughter, or other family member take over?

For many farmers, their retirement fund is in the equity accumulated over the years in the land they own. That means needing to sell the farm to access their retirement funds.

In the case of an active farm, a million dollars is only a start at purchasing the land, and machinery needed to farm the land, and that means it's a huge chunk of cash for a young farmer to access.

The government has recently announced more dollars for professional career training for farmers, and given the broad skill set modern farming requires, that is a positive thing.

However, the greatest barrier to young people entering farming is accessing the high level of capital needed, especially at a rate which makes the enterprise financially viable.

How government can impact that situation is not easily determined, as straight subsidies are usually in contravention of one trade deal, or another, but to see farm land in the hands of a new generation of Canadian farmers it may be a must.

Otherwise, the alternatives are likely to put land into the hands of investors and corporations as we move forward, which may, or may not, fit our collective vision of farming's future.

© Copyright Carlyle Observer


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