As farmland values ​​soar, young farmers become more vulnerable

Drew Spoelstra checks a soybean crop with his daughter Hadlea, 5, on their farm in Binbook, Ont., Tuesday, Aug. 9, 2022. The number of young farmers (under 35) fell 9.1% to 8 .6% in 2021. in 2016, the previous Statscan census on agriculture. (Photo by Nick Iwanyshyn) RB-CD-FARMLAND-08XXNick Iwanyshyn/The Globe and Mail

The average value of farmland and related buildings in Canada has jumped 22.7% in five years, making it harder for young farmers to enter the industry, according to Statistics Canada.

More than 60% of Canadian farmers are 55 or older, according to the agency’s 2021 agricultural census, and the number of young farmers (under 35) fell to 8.6% in 2021 from 9.1 % in 2016, the previous one. Statistical census.

Rising land values ​​present a barrier for young farmers who want to start a business either through the traditional route of transitioning a farm from one generation to the next or by renting land.

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Drew Spoelstra, vice-president of the Ontario Federation of Agriculture and a farmer from Binbrook, Ont., who is in the early stages of farm succession planning, said rising land prices are a concern for any young farmer starting out, as it could complicate the process of transferring farm assets to family members.

“Each generation retiring would like to get the most out of their payout, but I like to think there are a lot of farmers out there who want to see a successful business passed on to the next generation,” Spoelstra said.

He said young farmers face more challenges than ever, including rising input costs, rising interest rates, inflation and climate change.

Patrick Verkley, 31, recently started his poultry farm in Strathroy, Ontario, taking over part of the farm that has been passed down within the family over generations.

“Farm succession has always been difficult, and the particularities of the current environment make it even more difficult given the asset price situation,” Verkley said.

He said the current high farmland values ​​would have made it even more difficult for him to buy part of the farm, as he would have had to pay more.

“I took on substantial debt in order to have my own farm,” Mr. Verkley said. “If we were to do this today, it would basically mean that my parents would have to make even more sacrifices to help me get started.”

He said passing the farm on to the next generation would give them more time to become familiar with farming processes.

“Transferring control of the farm as soon as possible means that subsequent generations have even more time to improve in what they do, how they run it and how they run their operations,” Verkley said.

The significant increase in farmland prices has made it difficult for young people to pass on a farm to the next generation and to get into farming through renting, said Alfons Weersink, a professor in the Department of Food, Agricultural and Resource Economics at the Ontario Agricultural College.

“The current generation provides or sells the operation or transitions by giving the next generation some discount on the purchase price of that operation,” Dr. Weersink said. “Higher land values ​​have made things a bit more complicated for intergenerational farm transfers.”

Plus, as farms get bigger, farmland costs would get even higher, creating an additional barrier for young farmers, said Ellen Goddard, an agricultural economist at the University of Alberta.

“The average size of farms is increasing, and that in itself is potentially problematic if you’re a newbie farmer, because as the farm gets bigger, the equipment needed on the farm also gets bigger and more expensive,” he said. Dr. says Goddard.

She said it’s crucial to take a more nuanced look at the statistics on the average age of farmers in Canada. This is because farms are generally no longer operated by one person and most statistics focus on the owner of farms.

“The average age of the management team could be a bit lower,” she said.

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