Rising Farmland Costs are Hurting Farmers (March 2018)

The Pacific Field Corn Association was invited to attend The Standing Senate Committee on Agriculture and Forestry meeting in Vancouver on March 19, 2018.

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 Senate Committee on Agriculture and Forestry said in a report.

"Economic conditions are conspiring against farmers, who already encounter more adversity than they need. We need the government to help counter the market forces that are stacked against Canadian farmers which make it harder for them to buy the land they need to run successful farming enterprises."  said Senator Diane F. Griffin, Chair of the committee.

In 2015, for example, the average price of an acre of farmland in Canada rose by 10% over the previous year. This puts farming in a pinch: established farmers are tempted to sell their land to developers while younger farmers, without much credit history, don't have the capital to buy land.

The committee's report, A Growing Concern: How to Keep Farmland in the Hands of Canadian Farmers makes five recommendations aimed at helping farmers require the land they need to make a living, including tax reform proposals and land-use planning changes.

REPORT HIGHLIGHTS

Acquisition of Farmland
After studying the impact of the rising cost of farmland on Canadian farmers, the Senate Committee on Agriculture and Forestry makes five recommendations to the federal government aimed at helping farmers acquire the land they need to earn a living, to feed Canadians and to export food to a hungry world.

Canada's inventory of arable land is relatively small to begin with - just 7% of the country's overall area, or approximately 65 million hectares.  The footprint for farming is shrinking because of the conversion of farmland to urban developent, population growth, farmers selling land to support their retirement and a trend among farmers to convert their land to more valuable residential or commercial uses before selling it.

In the face of these challenges, senators urge the federal government to take action to offer immediate, substantial and lasting assistance to Canada's hard-working farmers and their families.

KEY RECOMMENDATIONS
An increase in the lifetime capital gains exemption for qualified farm property would make it easier for new farmers to acquire land.  Currently, the capital gains exemption is $1 million, meaning a farmer could sell land worth that amount without having to pay capital gains on it.  However, this exemption might be insufficient to encourage the transfer of farmland to a new farmer.

The committee recommends the governement explore the possibility of increasing the lifetime capital gains exemption for qualified farmland.

Many of the reasons for the increasing ..........   more to come............