Reports this week out of Saskatchewan tend to group farmers in two opposing categories. Farmer ‘A’ is an older farmer who wants to sell his farm. Farmer ‘A’ supports pension fund ownership of farmland because bigger investors drive up the price of farmland. Farmer ‘Z’ is a young farmer looking to buy into a farm. Farmer ‘Z’ wants to restrict large institutional investors to keep land prices low.
This simple story may sell papers, but it misses the bigger picture.
For one thing, the story leaves out farmers B-Y: the many experienced farmers in the middle who want to bring their children into their family farm, or have the capacity to operate more land and want to grow their assets before they retire.
Second, the story pits young farmers against old farmers when both share many interests, like ensuring a good outcome for the communities where they live and where they farm.
Third, the story suggests that price is the main driver when, in fact, price is one piece of a larger problem. The underlying issue is that the scale of farming needed to reach efficiency is much bigger and much more expensive than it used to be. Increased price per acre of farmland contributes to that overall expense, but so too does:
- Machinery: modern machinery is more efficient and expensive;
- Land size: farms need to be larger to accommodate the scale machines can operate and to rationalize their increased cost;
- Inputs: input costs tend to rise, and more are needed to farm increased acreage; and
- Demand: demand for crops, and therefore farmland, is increasing globally, making Canadian farmland more valuable.
These factors combine to drive up the cost of establishing a farm everywhere from Yorkton, Saskatchewan, where pension funds are not allowed to own farmland, to Cornwall, Ontario, where anyone can own farmland.
The types of questions we should be asking are the ones relevant to all Canadian farmers, ‘A’ to ‘Z’. How can young farmers enter farms that will scale? How can experienced farmers grow enough to accommodate more than one child without risking their existing business? How can older farmers exit while keeping the value of their farm within their communities? The answers lie in the type of capital Canadian farmers can access.
