Deep-pocketed farmland investors are pushing up prices making it harder for new farmers to get a start, says the Parkland Institute.
In a report called “Finance in the Fields: Investors, Lenders, Farmers and the Future of Farmland in Alberta,” researcher Katherine Aske lays out how wealthy investors have dramatically changed the financial landscape of Alberta’s farmland.
“The roots of the current shift go back to the 2008 financial collapse, when investors searching for more stable places to store their wealth began buying farmland in droves everywhere — including, as the report shows, in Alberta,” says Aske in a news release accompanying her 54-page report released on Tuesday.
“Farmland prices skyrocketed and were raised far beyond the land’s agricultural value, and are now double what they are in Saskatchewan, she says using Statistics Canada data from 2020.
“The new reality is that many farmers purchasing land in Alberta cannot pay it off in their lifetimes just by farming it.”
As land became prohibitively expensive, Alberta also saw a steep increase in the number of farmers working on rented land, she says.
“Tenant farming, in turn, leaves farmers in precarious economic positions and disconnects them from the long-term health of the land. Renting restricts farmers from implementing regenerative practices such as seeding green manures or transitioning to organic agriculture.”
Ken Larsen, who has farmed west of Red Deer for 46 years, was among more than 50 people Aske interviewed for her research and he agrees with her findings.
“Even established farmers, let alone young agrarians, are being priced out of the land market,” he says.
Larsen says this report asks some defining questions about the future of farmland in Alberta: “Who will be the next generation of farmers? How will this vital resource be managed.”
Blake Hall, a first-generation farmer from central Alberta, says, the report highlights the challenges created for farmers of all kinds by farmland consolidation and financialization.
“It documents the steady march of government and banking policy which removes farmers from the land and creates a feudal system without even realizing it,” he is quoted as saying.
While renting has long been an alternative to buying land, rental prices are rising to what Aske calls “troublesome levels.”
High land prices and start-up costs and thin profit margins is making it tougher for newcomers, “creating a crisis of generational renewal.”
“The same factors that are making life difficult for established farmers are outright impeding new farmers from entering the sector,” says Aske.
It is not too late to make changes to help new and long-time farmers, she suggests.
“If put under enough public pressure, there are a wild number of transformative state actions we could imagine. Redistributive land reform, the return of public banking and a farmer pension plan are just a few examples.”
Parkland Institute is a University of Alberta non-partisan research centre. To see the full report go to parklandinstitute.ca.