Just about every farmer I talk to in all parts of the country has a common buyer’s complaint — they want to expand their farming operation but land prices are high. It is difficult for established family farms to grow and new farmers are finding it almost impossible to get into the business on land they actually own.
According to Farm Credit Canada (FCC), there are a few regional surprises, but for the most part, increases in farmland values basically reflect the old law of supply and demand. Since someone decided a few years ago that farming was a good business, farmland values have steadily increased. The 2017 farmland values, for example, increased nationally about 8.4 per cent over 2016 land values.
But one Saskatchewan farmer called the other day to tell me about an interesting problem in his area that makes it very difficult for anyone to compete. He’s got a wealthy land hog in his area who just likes to own land and buys everything that comes available at prices no one can compete with. What do you do with that?
No doubt there is lots of competition for farmland — many farmers and ranchers would like to expand their land base, many investors are interested in buying land they can hopefully flip someday for a good profit and foreign interests are often interested in Canadian farmland as a place to park their money.
But as this Saskatchewan farmer said, it’s one thing if someone outbids you on a parcel on land they want to farm themselves, but in this case the guy is old, he doesn’t want to farm, but he likes to sit and tell his friends how many acres he owns.
The painful part is he buys land for a crazy price. He grew up on and inherited a family farm, presumably made his millions in some other business venture and now in his 80s snaps up any land that becomes available in the home territory.
“Anytime anything becomes available, he buys it,” says Saskatchewan farmer. “But he buys it for 1-½ times the market value. If there is a parcel of land and I bid $180,000, which is market value, he comes along with a bid of $280,000. I can’t even come close.”
The land baron buys the land and rents it out to farmers. Apparently, he’s not a bad human being, but when it comes to owning land he has an ego the size of a Class 9 combine. This farmer didn’t say it, but in hearing the story I imagined there are probably a few people in the area wishing the old guy would croak so opportunities to buy land at reasonable (market) prices would get back to equal footing.
It is an interesting problem, and one I see has no immediate remedy. He’s a Canadian citizen, not doing anything illegal — just a guy paying too much for land, he doesn’t want to farm. Sounds like he is so wrapped up in his own interests he probably doesn’t realize (or certainly doesn’t care about) the impact his buying habits have on anyone else.
I can sympathize with farmers — a quarter or half a section becomes available for sale across the road, and it would sure be a nice parcel to allow a person to expand and perhaps become more efficient with their equipment line, but it gets snapped up at 1-½ times market value. A great deal for the seller, but frustrating as heck for the producer who loses an opportunity to expand.
I could suggest the issue of unreasonable farmland prices be referred to the federal government to ponder. I know the Prime Minister “would take it very, very seriously” as he does with just about every matter brought to his attention. But then it gets complicated. Who offers the best selfie photo opportunity, the land baron or the farmer? And then what do you wear, just a nice business suit, or should he be outfitted in a traditional western Canadian farmer costume? Decisions, decisions.
For now, just about all anyone can do is tend to the crop that’s growing in the field this June and hopefully the answer will come.