Proceedings of the Standing Senate Committee on
Agriculture and Forestry
Issue No. 17 - Evidence - Meeting of October 20, 2016
OTTAWA, Thursday, October 20, 2016
The Standing Senate Committee on Agriculture and Forestry met this day at 8:02 a.m. to begin its study on the acquisition of farmland in Canada and its potential impact on the farming sector.
Senator Ghislain Maltais (Chair) in the chair.
[Translation]
The Chair: Welcome to this meeting of the Standing Senate Committee on Agriculture and Forestry. I am Senator Ghislain from Quebec, chair of the committee. I would ask the senators to introduce themselves please.
Senator Tardif: Claudette Tardif, from Alberta.
[English]
Senator Gagné: Hello. Raymonde Gagné from Manitoba.
Senator Plett: My name's Senator Donald Plett. I'm also from Manitoba.
Senator Unger: I'm Betty Unger, also from Alberta.
[Translation]
Senator Pratte: André Pratte, from Quebec.
Senator Dagenais: Jean-Guy Dagenais, from Quebec.
[English]
Senator Ogilvie: Kelvin Ogilvie, Nova Scotia.
The Chair: Today the committee is beginning its study on the acquisition of farmland in Canada and its potential impact to the farming sector.
Our first witness is Mr. Ron Bonnett, by video conference.
Ron Bonnett, President, Canadian Federation of Agriculture: Good morning. Thank you, Mr. Chairman and committee members, for the opportunity to appear before you and present the Canadian Federation of Agriculture's perspective on farmland values and farmland acquisition.
To begin, I want to state how important it is that farmland be considered a strategic and finite resource for Canada. Farmland is essential not only to the agricultural industry but to the broader Canadian culture, the economy and the well-being of Canadians. Approximately 6.7 million hectares is used for agriculture, representing less than 7 per cent of Canada's overall land mass. Dependable farmland, your class 1 to 3 land, is even a scarcer resource in this country, making up only 4.5 million hectares, or less than 5 per cent.
As a country that produces more than it consumes, available farmland is critical to increasing Canada's presence in international markets and achieving its full potential as a key driver of the Canadian economy.
Before I speak further to the importance of maintaining farmland, I'll briefly discuss farmland values, where we've seen historic increases over the past decade. 2007 to 2014 saw Canadian farmland values increase on average by 13 per cent. While these increases have moderated over the past two years, values still increased by 10.1 per cent in 2015. These figures come from Farm Credit Canada's annual Farmland Values Report, and I want to express our support for this continued analysis. Having access to information related to farmland issues is sorely lacking and of utmost importance in developing foreign policy responses.
Drawing upon this same report and CFA's own analysis on this front, I'll point to two key drivers of farmland values in Canada. The first is crop receipts. The historic increases Canada has seen were accompanied by historic highs in commodity prices. While these prices have declined significantly over the past year, the Canadian exchange rate continues to offer some price protection for Canadian producers, providing some explanation as to why we still see a continued increase in prices.
The second area is interest rates. Continued low interest rates, when coupled with the cash receipts I just mentioned, have led to very competitive farmland markets in many regions and multiple bids on many properties, creating a seller's market. I should mention, though, that interest rates would create vulnerability if there were to be a shift in interest rates.
While these factors lie at the heart of farmland land value trends in Canada, it's important to note that provincial policies and local contexts also play a large part in regional farmland markets across Canada. I'll touch on some of these factors shortly.
When discussing farmland acquisition, it's important to understand that different acquisitions face very different challenges. Common to any acquisition is the fact that the sale must work for both the buyer and seller. For established farms, acquisitions to increase their land base and achieve greater economies of scale must make business sense based on the returns they can achieve from the market.
For the next generation of farms, increased capital required to farm poses a critical barrier to entry. Meanwhile, sales of farm businesses represent a primary source of funds for retirees who retire from the business, and policy approaches need to ensure that their interests are also protected.
First, I'll speak to new entrants and the increased capital requirements they face. Many provinces currently offer beginning farm loan programs, and Farm Credit Canada and some private lenders offer support to young farmers and new entrants, but there are still areas for improvement.
On this front, the Canadian Federation of Agriculture has made the following recommendations for the next agriculture policy framework that begins in 2018.
First, provinces need to continue to increase access to preferential financing and grants for new entrants at a scale that enables commercially viable operations to start.
The next framework also needs to encourage a breadth of programming that addresses both transitional for inter- generational farm transfers and seed capital requirements for the establishment of new operations. One consideration could be tax-exempting interest and providing security for retiring producers participating in young farmer and new entrant programs in order to incentivize non-commercial lenders to offer more products and better rates.
A broader area of concern facing all farm purchases is the availability of farmland at affordable prices. Instances where farmland values have outpaced cash receipts create difficult economics for farmers looking to acquire land.
From CFA's review, these access and affordability issues can broadly fall into five key areas. First, urban growth continues to result in significant ongoing losses to Canada's most productive farmlands. Second, lack of profitability in agriculture continues to result in abandoned land in underserviced and economically challenged regions across Canada, resulting in the gradual yet often permanent loss of productive land due to lack of maintenance or competing interests. Third, as mentioned before, real estate speculation, rural estate developments, conservation groups and non- farming corporate interests continue to buy up farmland, reducing the overall availability of farmland to farmers. Fourth, investor interest in Canadian farmland from out of province and outside of Canada continues to raise concerns around long-term sovereignty of strategic farmland resources and, without better tracking and analysis, could pose potential challenges for affordability moving forward.
While our current analysis suggests this isn't a primary driver for farmland values, we lack the information to understand the true nature of these activities. This speaks to the final issue, which is the lack of comprehensive, publicly available information, which continues to limit policy-makers' ability to understand and address these issues.
In addressing availability and affordability, we must address the profitability, which would represent the ideal means of protecting Canadian farmland. However, in instances where non-farm interests compete with those of individual producers, current economic conditions rarely favour farmers, leaving little incentive to keep land in agricultural. Land-use planning that is overly restrictive to non-farm uses can negatively impact the financial health of individual farms and create distinct challenges for retiring farmers, so it is a matter of balancing.
Given that Canadian provinces and municipalities are primarily responsible for farmland preservation, a common set of objectives is needed to develop land-use planning policies capable of preserving farmland into the future. First, they need stability to ensure the precedence of farmland protection versus other competing interests through well- entrenched legislative regulation and rules that are not susceptible to change. This stability is required for producers to make necessary investments for continued competitiveness.
Second, they need to minimize uncertainty and clearly define how protections and other land-use planning policies will be implemented and applied on a consistent basis. They also need to develop consistent, clear policies and enforcement across all levels of government.
Finally, they need to be reviewed regularly, with clear processes and defined rules governing government decision making and providing flexibility, without undermining farmland protection.
In order to ensure that policy-makers can develop evidence-based approaches, comparable information needs to be made publicly available to access and analyze farmland laws. This includes updating the soil mapping across Canada, regular reporting of farmland loss at multiple scales and an inventory database that includes information on foreign and non-farm ownership of farmland. Without access to this information, Canadian policy-makers will continue to struggle with the loss of farmland and the challenges it presents.
I know Scott Ross, our staff person with CFA, is with you, and I understand my vice president Humphrey Banack from Alberta might be in the audience. We look forward to the questions, and I encourage to you continue with your work looking at access and affordability issues. Thank you.
The Chair: Thank you, Mr. Bonnett.
Before question period, I would like to introduce Senator Victor Oh from Ontario. Welcome, senator.
We will begin questions now.
Senator Plett: Thank you, gentlemen, for being here.
I come from a rural farming area, and the scope of farmers losing farmland, if you will, is a few things. One of them — and I think you touched on it — is developers buying farmland, people from out of country possibly coming in, foreign ownership.
I'm going to list all these and then you can comment on all three of them and tell me which ones are the largest problems.
The area that I'm from has large dairy producers. Dairy producers are certainly among those farmers that need a lot of land, not necessarily for feed but for spreading purposes. It seems that when you buy land for spreading purposes, there is no upper limit to what you are going to pay for that land. In my area, at least, that has driven the price of land up unbelievably. A grain farmer wanting to get out of business need only call a dairy farmer, and they will pay an inflated price for that land.
Maybe you could touch on all three of those and tell me which ones are the largest problems for our Canadian farmers.
Mr. Bonnett: Thank you for the question. I know there has been a lot of publicity around foreign ownership. The reality is we don't have really good information. As I mentioned, provincial governments are responsible for collecting the information, and they are not doing a very good job. It's really hard to go through the figures and find out how much land is actually going into foreign ownership.
The other thing related to that, as I mentioned in my presentation, was investment farms. Investment farms have both a good side and a bad side. They can provide capital to farmers, but we have to ensure that the farmers maintain the ownership.
You mentioned the issue of large dairy farms. I know in the province of Ontario, it was larger hog farms that were requiring it. I think what's behind that, more than even the type of farm it is, is provincial regulations on how they manage the manure from some of the livestock operations that's driving that price. Whether it's a dairy, hog or beef operation, new restrictions and environmental controls make it so that those farms, if they are going to stay in business, have to have a land base to take that manure.
I think it's a combination of factors. Foreign ownership is one we definitely have to monitor. The issue of environmental controls gets back to the idea that we have to monitor the policies on what is happening at the provincial level to see if that is driving farmland prices.
The one thing I am kind of encouraged to see is some of the research that's been done, particularly with managing manures. It's everything from methane digesters to pelletizing the waste. You could disconnect that land base from the type of operation it was so that they might even be able to sell pelletized fertilizer to grain farmers, which might equalize it.
Looking at research that might allow those farms to be a little less connected to having that large land base might help.
Senator Plett: Obviously, if you have people wanting to buy land, they have to have people that want to sell. It's getting more and more difficult to make money on the farm, with the exception of a few products. People seem to be very anxious to get a good price for their land. I know you don't have the figures, but this gets back to foreign ownership again. People are coming here to want to do something with the money that they have.
It's a two-way street. One, there is buyers, but the other one is that there are sellers. How do we regulate our Canadian farmers that want to sell their land and want to retire?
Mr. Bonnett: One of the things in my presentation is taking a look at the tax policy. It mentioned a lot of farmers that are selling, wanting to get that high value. Really, that's the only pension plan that some farmers have when they get out of business.
If there was a way to have tax laws that didn't penalize the interest they receive for holding back a mortgage, that would likely encourage them to sell that land at a lower interest rate over a long term to new farmers. Looking at some of those tax-policy laws might be a way to put an incentive in there that farmers would sell that land to either expanding operations or new farmers coming in to the business and, at the same time, make it affordable. At the end of the day, the new buyer taking over has to be able to cash-flow the operation.
Senator Tardif: Thank you for being here this morning and for your presentation. You mentioned in your presentation that in 2015, the increase in farmland values was estimated at 10 per cent. Prior to that, I believe you indicated it was estimated at 13 per cent. Are there variations across the different regions in the country regarding increase in farmland values?
Mr. Bonnett: Yes, there are variations. It depends where you are. If you look at farmland values, it's a very local issue. There might be pressures in some areas because of development pressure that's driving up the land. Like I mentioned, in Western Canada when the grain prices went up, there was a large increase.
I live and farm near Sault Ste. Marie, Ontario, and there's been a number of Old Order Mennonites who have moved into the area. They are buying up quite a bit of land in small blocks, but it has substantially driven up the land value there in the last 10 years.
I think it's very much locally dependent.
Senator Tardif: You mentioned Western Canada. I'm from Alberta, and I think farmland values have risen quite dramatically in Alberta as well, especially in northeastern Alberta.
Would the situation be the same, for example, in Ontario or New Brunswick?
Mr. Bonnett: New Brunswick, I don't think it would be as much of an increase, because it wasn't predominantly a grain-producing area.
I think it's very much tied to the commodity prices. I think that's what you've seen in the West with grain prices in the last few years. Actually, there were two things: grain prices and cattle prices, over the last few years, have risen. I think that's what drove prices in the West. However, there will be a backing off, because those commodities have dropped in price over the last number of months, and I think you'll see some ratcheting back on price increases.
Senator Tardif: My second question is regarding farm debt level. We've heard how farm debt level has really become a barrier for new entrants into the market. What would be an average farm debt level? Again, does it vary between regions?
Mr. Bonnett: That would vary between regions, but it would be millions and millions of dollars. It wouldn't be uncommon for a farm to be $5 million now, even for a small farm.
Again, it depends where you are. If you are in southwestern Ontario, you will see farmland priced out at $15,000 to $20,000 an acre. I'm in northern Ontario, and farmland is about $3,000 an acre. In Western Canada, it is anywhere from $2,000 to $5,000 an acre. There's that much variation.
Again, the price that's paid for the farmland is very dependent on what you're going to be selling off that farmland. You could have a very small parcel of land that you're producing very high-value crops off that you could afford to pay more for, whereas if you're taking more of a commodity approach to it, you couldn't pay those types of figures.
[Translation]
Senator Dagenais: I have three questions for Mr. Bonnett. You stated in your presentation that farming profits are low to non-existent. Under those circumstances, why are foreign buyers so interested in Canadian land?
[English]
Mr. Bonnett: Do you want me to answer as you go?
Senator Dagenais: Yes, sir.
Mr. Bonnett: I think the foreign ownership issue has less to do with profitability than it has to do with the fact that foreign buyers are seeing farmland as a very strategic investment. They come from countries that may not have the availability of farmland at what they consider affordable prices, and they're looking forward to the year 2050 when we have to feed a growing world population. I think, in some ways, some foreign investors have recognized the value of Canadian farmland more than we have here at home. They're looking at it more from an investment point of view, that there's going to be value of that land in the future because of the need for productive capacity to feed a growing world.
[Translation]
Senator Dagenais: According to your information, have they focused in on specific regions for land purchases?
[English]
Mr. Bonnett: Again, going back, we don't have really good, accurate information. I would suggest there are two areas where we've seen some activity or where it appears we've seen some activity. One area is British Columbia, where there's been a lot of pressure on farmland values, particularly in the Fraser Valley. Then, in Western Canada, we've seen investment there as well. But I go back to the fact that we need to really have good information and collect the data on farmland sales to really determine what's happening.
Then, I think we have to have a discussion about how strategic Canadian agriculture land is to Canadian producers and how we can ensure that that asset stays in Canadian hands.
[Translation]
Senator Dagenais: I have a suggestion. Why not impose a special tax on foreign workers? The proceeds of the tax could be used to create a fund to help Canadians purchase land, similar to the real estate tax in Vancouver. The objective would not be to prevent them from buying land but rather to create a fund.
[English]
Mr. Bonnett: I think it will take a little bit more analysis on what a tax would do. I think we have to understand the scope of the issue before we just take a hard hammer to it. At present, I don't think there has been substantial investment by foreign buyers. I think we have to monitor it.
Taxing at a higher rate might be a tool that would be used, but I would first want to have a lot of consultation with farmers and economists to see what the impact would be before you'd jump prematurely into a tax.
Senator Pratte: Welcome, sir, to the committee. You mentioned a few times already the problem of a lack of, or insufficient, data, especially as far as foreign buyers are concerned. I'd like to delve a bit deeper into this.
First of all, besides the issue of foreign buyers, are there other problems with the availability of data as far as farmland is concerned? Because, of course, availability of data for a study such as ours is quite important if we want to have a complete picture of this situation. Is data readily available on the issue of farmland property, besides the issue of foreign transactions?
Mr. Bonnett: I think inconsistency from one region or one province to the other province would be one of the bigger issues I would cite. It's very difficult to really go into the reporting that comes from different provinces and really understand if they're comparing apples to apples.
Actually, I might ask Scott, if he's sitting there, if he would want to comment on that question because he has been working in the office a lot on that file. Scott, is there anything you would want to share on the details on the data that are collected?
Scott Ross, Director, Business Risk Management and Farm Policy, Canadian Federation of Agriculture: Thanks, Ron. CFA is in the middle of reviewing farmland-access issues as part of a committee we have internally. Three areas we have identified are really lacking in information. First and foremost is having up-to-date soil mapping to understand what assets we actually have in Canada. There is available information on soil maps, but it tends to be quite outdated, often decades old. Just having an understanding of what the asset-base actually looks like is fairly critical.
Second would also be consistent reporting on what's actually happening in terms of change of use in farmland. Many provinces, if they do track that information, either don't aggregate it or don't publish it in a way that's publicly available, allowing policy-makers to really have insight into what is changing in terms of use and also what the drivers are behind those changes.
Then, the final piece would be not only information on foreign ownership but also on investor interests. There's a number of investment firms operating across Canada that tend to purchase fairly large swathes of farmland in large purchases, and it's very hard to pull that information out and understand what's happening because there's very limited insight into ownership interests in given purchases.
Senator Pratte: You mentioned soil mapping. Would you please explain what you mean by soil mapping?
Mr. Ross: Having an understanding of the soil conditions in an area, an understanding of the quality of the land, what kind of production is possible on it, just to understand the class of farmland, whether there's been any sort of change in condition to that land. One of the issues we see in an area like New Brunswick, for example, is that there's a lot of land actually abandoned, at this point, that's farmland. Over time, it gets overgrown and becomes non- productive. The economics of bringing it back into production essentially make that a permanent loss of land.
It is just having an understanding of what has changed over time in terms of some of the conditions of soil and the actual conditions of the land. A lot of the soil mapping information we rely on comes from the Canada Land Inventory. It was about 30 years ago when that process was undertaken at this point, and a lot has changed in that time.
Senator Pratte: In fact, if we wanted, as a committee, to have a precise portrait of the situation as far as property of farmland is concerned — and I understand that's something that you're trying to get also — it's pretty difficult; right?
Mr. Ross: Yes. It's challenging. I think it's a common request also from land-use planners across the country at the provincial level for them to understand what's even happening internally. Not only do they need some national aggregate information, but also the tools and supports available for them to collect that information. It is fairly critical for us in understanding the issue. That's why, as Ron said, we're cautious about proposing solutions because we feel there's a lot more still to be done in terms of understanding the issues involved.
Senator Pratte: Finally, is there someone besides you, for instance, at the federal level, Statistics Canada, Agriculture Canada, that is presently trying to get that kind of national picture of the situation?
Mr. Ross: Through the Agricultural Policy Framework, there have been a number of investments at the provincial level to update soil mapping exercises, as one example. I know Ontario just made some significant investments to update their soil mapping. It really does require the provinces to get involved and do a lot of the actual collection.
There is investment and support available. I think a lot of the interest is in really making sure that that information speaks to one another and is consistent across the country and that we're comprehensive in the projects that are undertaken.
[Translation]
The Chair: Mr. Ross, has each province gathered information on the state of the soil, soil mapping, and do they all use the same calculation method? If so, the committee would like to see the soil mapping for each of the provinces. Do you think they all use the same method? We have to know whether their data is comparable and whether we could receive that information from each province in Canada.
[English]
Mr. Ross: I think there are a number of common methodologies probably used. The issue is more of the currency of the data, so how recently it was collected and how comprehensive an initiative they undertook. There is probably some comparable information available in each province, but the question is as to how up to date it is and also whether they've really undertaken it through the same sort of methodology.
I think, by and large, the information on soil mapping would likely speak to each other; it would be comparable. It's a question of the availability of that information.
Senator Unger: Thank you, witnesses, for your appearance this morning. Some of my questions have already been asked, but, as a person whose family had a background in farming, I do have some opinions. I don't believe that government should be involved in trying to — in a way, they need to be involved to maybe monitor, as you said, the mapping, and I'd like to know what the costs of soil mapping would be.
Also, if farmlands are suppressed through government regulation, who are the winners and who are the losers?
Mr. Bonnett: There are a couple of things. First of all, I just wanted to make a comment on the soil mapping thing. One of the things that is quite obvious to farmers when they are buying farmland and they are looking at the mapping is that the scale that was used when mapping was done isn't very accurate at a local basis. You might have a huge outcropping of rock included in an area described as class 1 farmland. So one of the things that we need to look at is using new technology, whether GPS technology or imaging, to really look at how accurate the soil mapping is, because when you have situations where the soil map that you have in front of you doesn't reflect what you see on the ground, it creates problems with accuracy.
I think that speaks to your question of affordability. It would be difficult to put a farm price on it, but using the types of technology that we have now, it should be a lot easier to get accuracy than what we had in the past.
Going back into discussing the government's role, the government's role is likely to make sure there is consistency in approaches. As was mentioned, a lot of land-use planning lies with provincial authorities, and the role for the federal government in that discussion would be trying to ensure they use the same methodology for establishing mapping and try to do it in the same scale.
That also applies for collecting information on farm sales. Depending on where you are, you will get different types of information collected in a different manner, so it makes it very hard to have analysis.
On your comment about regulation, that's why I was somewhat reluctant to jump into the idea of taxing foreign ownership. We have to be careful about what happens when governments intervene in a marketplace, but it is important to have accurate information. There may at some point be a rationale for restricting land uses. It's broadly accepted across Canada now that, at the municipal planning area, identifying agriculturally significant land and putting policies in place to protect that is a good thing to do. Otherwise, you end up with development taking away some of that important strategic resource.
The government role could enter the picture in making sure accurate information is collected and identifying the significant areas of land that should be subject to land-use planning.
Senator Unger: I have a supplementary to a statement you made. You stated earlier that New Brunswick has much land that was abandoned. I'm curious about that. Again, back to government interference, probably the scariest words for a farmer might be, "I'm from the government, and I'm here to help."
Mr. Bonnett: I must say there are times when the government does do things to help. I mentioned I live in northern Ontario, and the government in Ontario had decided they wanted to develop some farmlands in the north and they put programming in place to assist with things like tile drainage. I have taken advantage of that on our own farm, and I know a large number of farms have. It has resulted in a massive amount of land being tile-drained with subsequent huge productive increases.
There are things that government can do to encourage the development of land. You mentioned New Brunswick, and a lot of that land likely went out of production over a period of time when the returns from farming were not what they are now.
I do not want to create a negative impression, so I would say that farm economics have improved substantially in the last 10 to 15 years. The margins are higher than they were in the past, and even though we have declining prices right now, we're still much better off than what we were before.
The wording in my presentation was that profitability at the farm level is a real way to ensure that farmland is still owned and maintained by farmers. That gets into a whole discussion about making sure that we have the proper tools for support programs, insurance programs and things like that in the next agriculture policy framework to make sure that farming is a viable and profitable business.
[Translation]
Senator Gagné: Welcome and thank you for being here this morning. I would like to follow up on the lack of quality data to serve as the basis for public policy-making.
You said you think the federal government could play a role in guiding research in this area. I can certainly imagine that, but the provinces have to be committed to the process.
Do you think ties should be created with universities, especially faculties of agriculture, business administration and graduate business programs, to do further research? Do such ties exist already?
[English]
Mr. Bonnett: Just a quick answer: At the top, there has been a lot of discussion about the research clusters that have been put in place over the last number of years, bringing together different universities in different provinces to identify a key issue that needed to be addressed and bringing a number of players together. There are examples of that.
I don't think looking at data recording, land-use policies and soil mapping have been identified as priority areas, so there would be an approach where that would work.
Scott, would you like to comment on that as well?
Mr. Ross: There is some work being undertaken nationally right now. There is a pan-Canadian study being undertaken, led by Dr. David Connell out of the University of Northern British Columbia, looking at farmland preservation policies across Canada. That's a lens looking at the different interventions and different provincial approaches and comparing those.
Where we have not seen as much research on the part of academic institutions or industry-academic collaborations has been around soil mapping and some of the other exercises we're speaking to here.
When it comes to the federal role versus the provincial role, what we have envisioned in our discussions is some federal leadership to bring the provinces together and have this conversation. The provinces, ultimately, are the ones responsible for interventions and data collection in this space, so from our perspective, the federal government's role, ideally, would be to help convene a conversation and make sure everyone is speaking together on this.
[Translation]
The Chair: I would like to add something briefly, Mr. Ross. With the new technologies available today, it is much easier to map out and identify farmland than it was 50 years ago. I think Guelph University, in Ontario, has some expertise in this area, and I invite you to get in touch with them. It is 2016 and we have different tools at our disposal than we did in the 1970s.
[English]
Senator Tardif: I was concerned when you indicated that less than 7 per cent of the land mass we have is for agricultural purposes. That does not seem to be a large amount. I'm sure availability of farmland is critical if we want to maintain our competitiveness and our productivity for agriculture and agri-food products in Canada. What strategies are you undertaking to make sure we maintain what we have and possibly expand on the 7 per cent?
Mr. Bonnett: As far as strategies, at this point it's raising awareness of the importance of agricultural land and making sure it's recognized at the municipal and provincial level in land use planning. Again, as was mentioned earlier, this crosses every level of government. There is a national interest in making sure that agriculture continues to be a key economic driver. It needs to be recognized that provincial authorities have authority for land use planning, and a lot of that is delegated to the municipalities.
Within farm organizations, the structure of the Canadian Federation of Agriculture is such that we have provincial farm organizations as our membership. They, in turn, have local chapters or federations that bring these policies to local councils.
The agriculture community has been very actively involved when land use planning takes place at the local level. What strategy we have is raising awareness and ensuring that we have the ability to communicate the issues that have been identified at the national level down to the local level to make sure that they are involved in the land use planning discussions that take place in their area.
Senator Tardif: I know many countries are buying land in other countries because of food security issues and food safety issues. Do we have enough to meet our own needs? I know we export a lot, but down the road, is the 7 per cent sufficient to maintain food security in Canada?
Mr. Bonnett: Definitely. We produce more than twice as much as we consume. I think our exports are about 60 per cent of our production.
As was mentioned, there is some more marginal land that could be brought into production in Canada. Northern Quebec and northern Ontario have a huge clay belt that could be developed and, with changing climatic factors, that land could be brought into production.
The other thing we need to look at is continuing ongoing research into productivity increases that will allow us to be one of the few countries in the world, by 2050, that can still produce a lot more than what we consume. That will contribute not only to food security on a global basis, but it also really contributes to the economy of Canada.
I think there are a number of issues that get a lot broader than what your review on farmland acquisition is, such as making sure that agriculture has access to a labour force so we can meet the demands of a growing world population. It is a broad discussion, but from the land base part, we have lots of potential to grow our productivity.
Senator Oh: Thank you, witnesses. In the background paper prepared by the Library of Parliament, Farmland Grabbing in Canada, several of the recent acquisitions of farmland in Canada that have given rise to controversy have been made by Canadian entities, not by foreigners. What is your comment on this assessment? What is your opinion on foreign and domestic land acquisition in Canada?
Mr. Bonnett: I keep going back to getting information on foreign ownership. It depends on how you look at foreign ownership. If foreign ownership is a foreigner coming in, buying farmland and operating that farmland themselves as a family farm, we have seen that happening for the last 30 or 40 years, whether it be Dutch farmers coming into southwestern Ontario or Ukrainian farmers into Western Canada. That has been ongoing.
The concern would be foreign owners coming in and buying up large blocks of land and just using it as an asset, and they would hire someone to manage that asset. I think the connection with the person farming the land is more important than whether they come from another country or not.
With investment firms buying blocks of farmland, we would need to look at what policies are there to ensure there is still that connection as to who controls the use of the land.
If foreign investment is there to help provide capital to farmers who want to expand or young farmers wanting to invest in farming, it might be another form of capital in addition to banks and Farm Credit that could be used to help them make sure they have productive operations.
It's a mix of those things, but the one critical thing is making sure there is still that connection to the person who is actually operating the farm having control of that asset.
Senator Plett: Mr. Ross, when you answered one of Senator Pratte's questions, you talked about land that has gone out of production. I haven't heard much about that, and I would like you to explain that a little more.
My ancestors, when they came here in 1874, had to break land. They had to clear rocks and pull the trees off of land, and that's now some of the most productive land in the entire country, in southeastern Manitoba.
I find it strange that land that has been in use and has been producing crops, because it's overgrown by weeds, all of a sudden is not land that is of any value anymore. How much of a problem is that? How many acres of land do we have like that? I find that very strange. Maybe we should get the Mennonites in there to take over that land. They might do well.
Mr. Ross: I can't speak to the actual scale. I don't have figures as to how common it is across Canada. By and large, it is not a common issue in most provinces across Canada.
Where we have seen some instances of abandonment, it's in areas of New Brunswick where we've seen it raised. The drivers of it are primarily a lack of appropriate infrastructure in the area and other primary processing facilities or other infrastructure or nearby production to make it economical for farmers in the area to really break that land again and bring it back into production.
Primarily, we've seen it as a result of poor economics in some situations, and then the lack of appropriate infrastructure in the area to really make it a viable investment for farmers in nearby areas.
Senator Plett: If it is a problem, I would like you to send us, through the clerk, some statistics on how much of a problem this is across the country. I would be very interested in it.
Mr. Ross: Sure.
Mr. Bonnett: May I comment on that?
Senator Plett: Yes, please do.
Mr. Bonnett: I can give a specific example. I mentioned about the great clay belt in northern Ontario. At one point, there was a lot of land cleared there, and the reason it was cleared was because at that time, the forestry industry used horses to take logs out of the bush, so they needed a lot of hay for fuel for those horses.
The calculation that I've seen just in the area up around Cochrane, Ontario, is there was almost 1.25 million acres that was used for supplying the fuel for horses. Naturally, that market disappeared, so all that land went back into trees. So here you have land that could be productive but has gone out of production.
That is a concrete example of how changing market conditions and profitability took that land out of production, but it still has the potential to be brought back into production.
Senator Plett: Ontario has a lot of dairy. I mentioned that earlier. Why would we not be encouraging some dairy farmers to operate there? Their concern is that they need acres to spread the manure. Even if crops are minimal at best, they would at least alleviate one of those problems, and we might be able to have some large dairy producers or possibly hog producers there.
Mr. Bonnett: Actually, there is a program where they are trying to encourage beef producers to go up into that area now. There has been recognition that that might create some potential opportunity.
Senator Ogilvie: I understand all that we are discussing here today, and I was not going to enter into the issues. But this business of land going out of use is not an evil issue; its evolutionary issue in Eastern Canada. I'm from Nova Scotia. I own one of those farms that was once a farm, but it's not any more.
We had a situation in Eastern Canada — let's take New Brunswick and Nova Scotia — where farms developed historically, before the West was even being opened, as relatively small plots of land in comparison to Central and Western Canada. We would have farms of, let's say, 250 acres in total, but not all of that would be farmed land. There would be highly productive land on a riverside, let's say, and then, on a hillside, there would be part forest. A family survived very well with mixed farming and a forest from which they could cut and harvest wood and a number of items like that. Over time, those farms became unproductive in terms of being able to attract the next generation to try to operate on a small property like that.
The piece of land that I refer to that I happen to own is on a stretch of highway in Nova Scotia of roughly 100 kilometres in which, historically, every quarter of a kilometre, there was a family farm. Today, on that entire stretch, there are only two operating, viable farms. They are, in fact, dairy farms, and they are productive.
The land is still there; much of it has grown up, as you indicated. It would take some money to bring it back. In my case, in a 75-acre plot, 65 acres was cleared when I bought it. I have paid to have somebody knock the hay down annually because I can't even give the hay away in the local area, or at least I couldn't until very recently.
I think that when we look at the idea of land availability, it is as you and Mr. Ross have stated today; it's very difficult to make broad sweeping generalizations because we don't have a good analysis of the amount of land that was used historically, let alone the amount of land that never was used but could, in fact, if cleared, become productive agricultural land.
The comment I've just made about Nova Scotia is about a province that has one of the most productive agricultural areas in the country, the Annapolis Valley, which is where my actual home is. There, we have farms that are tremendously productive, competitive and viable; yet, very few of them measure their acreage in sections, as we measure land in the West. Yet, they are still, because of the nature of the terrain and the ability to cooperate jointly with regard to large, modern pieces of equipment and to get together with regard to crop rotation, able to have tremendously competitive farms.
So here we have a situation where we have a province with incredibly productive farmland operating today and a great deal of land that is not used today for a number of reasons. Many of those are sociological because people simply do not live in the rural parts of Eastern Canada the way they did historically.
I think it is really important that this committee attempt to get a real sense of what that land potential is and where it is today. Mr. Ross has very clearly indicated a key issue, and that is an updated registry of land that isn't just a registry but a registry of the quality of land and the potential utilization of the land. I really have enjoyed the commentary that you have brought to us today.
Mr. Bonnett: Just a quick comment on that: I think you've identified a couple of key issues. One is that a lot of land- use issues and acquisitions issues are very locally based. It might be very different in Western Canada than it is in Nova Scotia. I know it's different in northern Ontario, where I live and farm, than it is in the south.
The other thing you mentioned is about making sure that whatever happens is market driven. I said that the hay production went out in northern Ontario because the horses disappeared. That was a market factor. You mentioned, in Nova Scotia, the change that there has been there with livestock and small farmers that were used in balance, but, at the same time, if you look at Eastern Canada right now, there is huge growth in the blueberry sector, where they are actually finding a market that is driving an emerging agricultural issue.
It goes back to the point that was in the presentation, that the best way to ensure that farmland is secured is to ensure that all of those tools are there for profitability at the farm. It doesn't matter whether that farm is 20 hectares or 5,000 hectares; profitability has to be at the core of ensuring that that farmland stays productive.
[Translation]
The Chair: Before I give the floor to Senator Pratte, I would like to mention something to the committee members quickly.
There is a land inventory in Canada, better known by the acronym ARDA, which covers a million square miles. The inventory includes the three central provinces, Ontario, Quebec and the Maritimes, and is available to provincial governments for $20 per map.
[English]
Senator Unger: According to information we have, there was a report released by the United States Department of Agriculture between 2007 to 2011 about foreign landholdings in cropland and pasture having increased, but the changes were mainly explained by foreign-owned wind companies entering long-term leases on agricultural land acreage. In your opinion, is this happening in Canada? I know in Ontario, for example, there is a fair amount of land that has windmills on it, and I don't know if they can coexist with farmland. Is this sort of phenomenon a good idea?
Mr. Bonnett: The windmill issue in Ontario has been very controversial. Those farmers that have the windmills on their property and are getting revenue from them think it's a very good idea. The neighbours that don't have windmills and are not getting any money from it don't think it's a good idea. It's very much an issue of where you stand. Actually, on our own farm, we have solar panels. It's likely an emerging trend.
If I were to look at any kind of advice, it gets back to land use planning, trying to avoid taking high-value agricultural land out of production. That goes back to the issue of the scale of the mapping. There are areas on my farm where you can put solar or wind, where it will not interfere with agriculture at all because it's rock. Beside that, I have very good land that could be in production.
I think it's very much a localized issue as to whether it's a good idea or not, and it's an opportunity for farmers to generate some extra revenue, but it boils down to the soil mapping issue, understanding where those windmills should be located. I don't believe windmills and solar panels should be taking up high-value agricultural land because that's a resource we can use in the future, particularly when there is all kinds of land that they could be put on and not interfere with the productivity of the agriculture side at all.
The Chair: Thank you very much, Mr. Bonnett and Mr. Ross for your participation in our committee. It's been very interesting.
[Translation]
The Chair: For the second part of this meeting, we welcome Mr. Paul Glenn, Chair of the Canadian Young Farmers' Forum.
Mr. Glenn, you have a presentation to make and then the senators will have some questions. If you could proceed quickly please because we have 55 minutes left and I am sure the senators will have a lot of questions for you.
Please go ahead.
[English]
Paul Glenn, Chair, Canadian Young Farmers' Forum: Thank you, Mr. Chairman and committee members, for the opportunity to appear before you today to present a young farmer's perspective on behalf of the Canadian Young Farmers' Forum.
When I think of Canada, I think of agriculture. From east to west, Canada is agriculture. As Ron said previously, there is less and less farmland going into production, and this is expected for years to come, especially in my area.
Some of the reasons for high-price farmer-to-farmer land purchases are done so by leveraging current-owned land to achieve economy of scale needed for future and existing farmers and business models. The problems that arise from non-farmer land purchases are tougher land rental negotiations. Land rent can make or break an operation. Some investment companies want increasing land rent year to year, no matter the commodity pricing, which is limiting net profit and more land is needed again to achieve economy of scale. Land purchases by retirees moving from the city centres to live in the country very often lack any knowledge of farmland rental or have no interest in renting, and the land goes out of production. These are just some of the factors to decreasing profit margins and discouraging young and new entrants into farming.
Some solutions to this could be limiting foreign investors, continuing and growing programs for young farmers to access capital to purchase land and reducing interest rates for farmland purchases by farmers. We need to protect the land base we have, as it is very limited.
If farming isn't profitable, we will not have the uptake of our very bright, talented and savvy young people into agriculture.
Thank you.
[Translation]
Senator Dagenais: I would like to go back to the question I asked Mr. Bonnett regarding funding for farmland. First of all, we know it is very expensive. For some time now, we have seen foreign interest in our farmland. What do you think of the idea of imposing a tax on foreign buyers, perhaps 15 per cent? With the proceeds, we could create a fund to help young Canadian farmers purchase or at least retain ownership of farmland.
[English]
Mr. Glenn: I think I would be for that personally because it's tough dealing with land owners here in the province and in the country — so when you're dealing with very outside distant land ownership, especially for land rental rates, if they're going to be on an increasing scale, an increasing scale in agricultural just doesn't work because commodity pricing is not going up year to year. In fact, like it's showing right now, it's going down. So I think that would be a great advantage for Canadian farmers.
[Translation]
Senator Dagenais: What would you suggest to the government to provide financial support to help people purchase or retain ownership of farmland? Very often, people have had to go into debt to purchase farmland. What would you suggest to help farmers?
[English]
Mr. Glenn: For current young farmers, there are some programs available through Agriculture and Agri-Food Canada. If we increase some of the programs with possibly lower interest rates, specifically for land purchases, even if we can extend the term of land purchases for the financing, that could make it affordable. As land pricing rises, it really just doesn't make simple business sense to buy this capital, because the cropping of the farmland just will not pay for it.
I know for myself in my operation, we're trying right now to secure our future and our future operation. The trick of that is purchasing farmland to secure that, because I know a lot of farmland that we've been renting for years has been bought up by either investors from the city or people wanting to retire on the farm, which I don't blame them for, but they either just have no interest in renting the land at all or they might not like current, modern farm practices that fit into my business model. It creates a lot of challenges.
[Translation]
Senator Dagenais: It was mentioned earlier that foreign buyers take a long-term perspective, up to 2050 or so. Why 2050 in particular?
Perhaps Canadians are not sufficiently interested in agriculture, or we are unable to create a long-term financial vision beyond 2050. What are your thoughts for 2050? What would the priority be then?
[English]
Mr. Glenn: Honestly, I'm not sure where 2050 came from. I know agriculture is not a very definite thing; it changes very rapidly year to year. We had very high prices five years ago, and then we had the next year hitting rock bottom prices.
To run a business with very fluctuating graphs like that is extremely challenging, and if we're going to encourage more young people to get into farming, we need something with a solid base to work with. Land pricing and/or land rental agreements are going to have to come into play to assist young farmers especially, because of the huge capital needed.
Senator Plett: The previous witness, in answer to Senator Tardif's question about whether we had enough land to supply our needs, said 60 per cent of our product is being exported. You say we have a limited land base. The previous witness also said there was a lot of land that was going out of production for one reason or another, and I'm sure you heard that. To me, there's a bit of a contradiction here. I'm wondering which one is the case.
I would like you to explain to me a little bit where the land base is limited and also what you recommend as the solution for some of the problems. We've talked about foreign ownership. Apparently, we say there's foreign ownership, but we don't have statistics on how much foreign ownership there is. In order to say we have too much foreign ownership, we need to know where we have too much foreign ownership and how much foreign ownership.
How much of it is — and I asked the question and, again, he couldn't answer it — as a result of land developers? I had developed some land around the village that I was living in for a number of years. How much of it is as a result of people buying land and developing it into residential properties, five-acre parcels of land, so on and so forth?
Where are the problems? Where is the land base limited, and what do you suggest as a solution?
Mr. Glenn: Some of the land that I'm actually speaking about is class 1 farmland, so typically around large city centres. My perspective, if you're thinking of the Toronto area, very productive farmland, but because of land speculation, it's obviously being bought up for land speculation and for investors.
My personal farm, where I farm, kind of gets into the Canadian Shield just north of me, and very marshy. I live in Peterborough, Ontario, so about three hours from here southwest. Between Perth and Peterborough, there's not a lot of productive farmland.
The trick is where I am in my business, as the city continues to grow outward, as it will — I don't think there's any stopping that — to have the ability to either own the land or have rental contracts that permit me to farm profitably as I go further. Obviously, with climate change, there are benefits to going a little bit further North. More land has more heat units in it, so it is a little bit more profitable to farm that land as well.
I wouldn't say, because we don't have the statistics on foreign land ownership, there isn't any in my area. I'm speaking more to around the city centres for land speculation that way.
Senator Plett: I'll ask you a hypothetical question. You can use somebody else as to what they would do.
You are a farmer and you have 2,000 acres of land up against the city of Toronto. That land, in order to farm, is worth $13,000 an acre. In order for the city to expand, it's worth $500,000 or $1 million dollars an acre. What are you going to do? Are you going to farm it, or are you going to sell it?
Mr. Glenn: Hypothetically speaking, I would sell it and buy 10 times the amount of land somewhere else.
Senator Plett: Exactly. So the problem is twofold. The problem is people that are coming in and buying it, as well as everybody who is there selling it, will also do exactly the same thing. I don't believe that we have a socialist state where we can absolutely control that.
Mr. Glenn: It's an interesting question, because currently I own land around the city centre. It's always strategic planning. Like you say, there's no real way to stop the city from growing. That's going to happen. There's always planning, that if I did sell this parcel of land, that I will expand further out, but if I sell 100 acres, I could buy 1,000 acres. It just gives me the ability to be, again, economy of scale.
Senator Plett: What you're then going to do, if you want a farm, is you are now going to take your $10 million that you just made, and you're going to go somewhere else and buy land, and you are going to be able to pay a premium for land somewhere else. It's just going to be a vicious circle. You now have the money to go and pay above-normal prices for land somewhere else, and you will be very hard to compete against.
Mr. Glenn: This is exactly what's happening across Canada right now — in B.C., land being $50,000-plus an acre. You'll see in Central Canada, in the West, Manitoba, Saskatchewan, land prices have doubled, tripled, quadrupled in the past five years because of things just like that.
Again, I don't have the answer for you. I really don't.
Senator Tardif: Thank you for being here today. I'm trying to understand the context of a young farmer. The young farmers I know in Alberta have continued because it's a family farm, and they've continued.
Are most of the new entrants, young farmers, because they're taking over the family farm, or are there many new entrants who are just saying, "I want to be a farmer. My parents have not had a farm"? How many young farmers are dependent on their parents having owned a farm before coming into the market?
Mr. Glenn: The easiest way to become a farmer is to be born one, for sure. It's extremely challenging for a new entrant or a non-farmer to become a farmer, just simply from the capital assets needed, but that's why you see a lot of niche-market young farmers at farmers' markets selling high-value crops. If they only have three or four acres of land, they can produce some higher-value crops to create an income.
I think it's extremely challenging for any young farmer to go and purchase 100 acres. A 100-acre farm is not enough to produce an income to live on, so you're talking about hundreds of acres needed. If you're an entrant farmer, basically land rental is the only way to get in and actually start, if you're going to crop farm.
Senator Tardif: Can you make money on renting the land? Obviously, but is it a profitable way? Is it the only way to get into the market? Between being a landowner and a land renter, is there still a profitability that can occur if you're renting the land?
Mr. Glenn: Absolutely there is, but it definitely depends on the land rental agreement and the relationship between the owner and the renter. If crop prices are decreasing for the next five years and your land rental contract is increasing, everyone wants a return on their investment, and I don't blame them, but at some point there's a number that just doesn't make sense anymore. For an entrant, that's why it's tough, because typically, if you're brand new into it, to get land, you're going to pay top dollar to get into the market.
Senator Tardif: What would be the capital needed? I realize this depends upon the crop and the region, but, for example, what would be the capital needed to begin in Western Canada? Farm machinery is very expensive. What type of capital would we be looking at here?
Mr. Glenn: It really does depend on land prices if you're planning on purchasing land. Equipment is a big one. Again, farm equipment holds its value very well compared to other sectors.
I don't I think could put a number on it because each business plan varies drastically. From a farmer's market, you're going to need $100,000 plus just to start, get the equipment and input costs. To a grain farmer, you're going to need hundreds of thousands.
Senator Pratte: Welcome to this committee. When we thought of this study, we had in mind foreign ownership and big investors buying land. You mostly talked about city dwellers going to buy farmland for their retirement, which is possibly a more common problem from your perspective.
Maybe I was distracted, but I didn't hear what solution you proposed for the issue of city dwellers who buy farmland and who are not interested in renting the land to farmers. What is your proposed solution for that issue?
Mr. Glenn: I don't know if it's possible if you have workable land now and you take it out of production to apply a tax on that. I'm not sure if that's feasible or a good idea. There has to be some measure taken to help people want to rent their land or to negotiate a land rental price that's fair and reasonable for the farmer to be profitable.
Senator Pratte: In Quebec, they regulate farmland very strictly. I'm not sure if that really prevents any of this or if that is a solution. Have you looked into the way they are doing things at all?
Mr. Glenn: Honestly, I'm not familiar with the way it works in Quebec, sorry.
Senator Pratte: If you look at this issue that you mentioned a couple of times and look at other issues like foreign ownership, investment by multinational or investment firms that are buying the land for all kinds of purposes, whether it's pure speculation or other purposes, what is the biggest issue, in your mind, for new farmers?
Mr. Glenn: The biggest thing is the uncertainty of the market, because there's a global market and some of our competitors are at a great advantage compared to us — Brazil, for example. They can grow a lot of crops very efficiently at a very low costs compared to us.
I guess the challenge for a young farmer is knowing the future. If you're going to invest all of your time, leverage yourself and spend a lot of money to do it, you need to have some certainty and some solid backbone to work with.
How do we get there? I'm not entirely sure, but securing the land to begin with is a start. If land prices continue to jump — double and triple — I don't see myself farming anymore. I love farming, but if I can't feed my family, then, as much as I want to do it, I can't do it.
Senator Pratte: And you see land prices as being one competitive disadvantage compared to your competitors in other countries, for instance.
Mr. Glenn: Yes, definitely the global competitors for sure.
Senator Oh: Thank you for being here. As a young farmer, you plan for 30 years later, when you retire someday. You want to see your land value increase.
Mr. Glenn: That's the big question. Are you speculating on land yourself so when you want to retire, that is your retirement package? That's not my plan, because if my nieces and nephews want to farm, I'd love to see them take over the farm as well. My current plan is not to sell the land, because I see farming as a great way to make a living and a great way of life. The only way for me to protect that is to hang onto the land myself.
Senator Oh: But the fact is that in real life you certainly don't want to retire at the same price that you purchased 35 years ago.
Mr. Glenn: I understand the dilemma. I really don't have the answer for you. If you make agriculture more profitable, then maybe there's not as much income needed at the end.
Senator Oh: But I see that there is no problem with land increasing in value, because a free economy has a cycle. I have seen it. When I first moved to the City of Mississauga, there were only 250,000 people and Square One Shopping Centre, which has now become the largest shopping centre in Eastern Canada. I don't see farmland in the city centre any more. I used to remember that I picked apples on Ontario Street, and now the whole city has grown to 1 million people.
Cities grow, and cities compete with farmlands. The developers are building big shopping centres and outlet centres, and they are all developers. The city is encroaching on farmland. Certainly, farmers are moving farther out, with good retirement value of their lands.
I believe everything has a cycle. I have seen for 10 years nobody building a single house; no developer has built anything. So it goes on a cycle. I think for a young farmer, you want to retire 35 years later and see some value increase on your land. It couldn't be possible to sell the land at the same price that you purchased it 40 years ago. Can you comment on that?
Mr. Glenn: In Western Canada, it's not so much the case of some of the big cities expanding. It definitely is land speculation, when they're buying hundreds of thousands of acres. Some of the companies are working with farmers, and that seems to be working very well for some farmers, especially young farmers, to purchase land or at least have control of the land with longer-term, five- and ten-year, agreements.
But in terms of any land around a city centre, I don't see how you'd stop it.
Senator Oh: Maybe we should do a survey with young farmers about what they would see in the future if they become a farmer. That is probably something that we all can work on. How to balance it? The city is expanding, and the country needs 300,000 new immigrants every year to grow the economy. With farmland and the cities expanding, there has to be a check and balance.
Mr. Glenn: The three main challenges that we've identified with young farmers is access to land, access to capital and access to labour. There definitely is a labour shortage in agriculture. There's a lot of money being lost for value added.
So, yes, there are a lot of challenges for young farmers starting, but we're definitely taking information in all the time from all our members because we'd like to know the future too.
Senator Gagné: In your introductory remarks, you touched upon the type of credit that was available to young farmers. Could you comment on what credit should be available?
Mr. Glenn: I know one program from AAFC, which I believe is $400,000. I guess it depends on your credit rating as well; they're not just giving it to anyone, obviously.
The number needed really does vary based on where you are, what crop you're going to produce and having the business model around it. Depending on your marketing technique for what crop it is, it really changes drastically.
Senator Gagné: Would you see the involvement of investment of private funds available to young farmers?
Mr. Glenn: Do I see that now?
Senator Gagné: Do you see that, and do you foresee that as maybe a possibility of accessing funds?
Mr. Glenn: I definitely see more and more investment companies buying up the land because it does seem to be a very safe investment. Whether that helps young farmers, I'm not entirely sure, because it is somewhat new. I know, from what I've seen so far, that it does make another competitor in the market. If you are a farmer who is trying to purchase the land, you definitely have a strong competitor.
[Translation]
The Chair: Mr. Glenn, I am not familiar with Ontario's farmland protection act. If you have the time, have a look at Quebec's act on the preservation of agricultural land and agricultural activities. This act has been in effect for close to 30 years. It is one of the strictest farmland protection acts in Canada, even in North America, I would say. It requires a great deal of patience to dezone parts of a farm in Quebec because the government has decided to protect its farmland.
Another important aspect is the difficulty transferring farmland from a father to his son or daughter. When farmers retire, their farm is their pension. No one will lend the children the millions of dollars it would take to buy the farm. A financial institution making such a loan would risk losing everything.
To your knowledge, how can a father transfer his farm to his son or daughter without going into debt or going bankrupt?
[English]
Mr. Glenn: I guess that is the trick to farmland ownership. We do a lot of work with succession planning, and I think it does start not two, three, five years; it starts ten years out. One, you have to have a solid business plan and a good business model running. It can't just be paying a wage to the parents running the farm now. It has to be a feasible business model for anybody to give you any funding. So that's the trick, to have really good succession planning starting early on, knowing who is going to come into the business.
The tough part with that is that, to do a plan with your son or daughter who is 15, is a pretty tricky thing. That is typically why it happens in the 20s and 30s, but the earlier the land is transferred, the better for the operation and the more it can grow quickly. That's the tough part about succession planning.
The Chair: Thank you.
Senator Unger: Mr. Glenn, you mentioned several challenges for young people who may want to farm. Recently, the federal government increased the amount of down payment required. I know it applies to housing; I'm not sure about farmland. Could you comment on that and how that would affect you and other young people wanting to buy farmland?
Mr. Glenn: I'm not sure on those specifics, whether it does affect farmland purchases or not. I would have to get back to you on that. If it does, I know that is going to create a challenge, likely for investors and/or banks, especially with succession plans, if that's what you are doing and they are first-time buyers. I think that would make it a lot more complicated.
Senator Unger: I'm talking, more specifically, about people who are not big investors. That would be another problem, but, more specifically, to smaller farms.
Mr. Glenn: Yes.
Senator Plett: Maybe you can get the information to the clerk?
Mr. Glenn: Yes.
[Translation]
The Chair: Mr. Glenn, could you please send us that information as quickly as possible?
In the meantime, thank you for your testimony. You have seen how interested the senators are. The issue of young farmers and transferring ownership of agricultural operations are of great concern for the future, not only for the farmers, but for all Canadians. We are very happy that you were able to take part in this discussion.
(The committee adjourned.)