Every sector is feeling the effects of those expectations. And you don’t need to go far to find a farmer who will tell you the cost underpinning all the programs, tech, innovation, learning, labour et cetera is rarely, if ever, passed on to the consumer.

On top of that comes the volatility of today’s economic and political environments. You just need to open your phone to find a string of news about the myriad factors that influence the economy’s health — none of which has been reliably good for business in the last four years.

So, what does that mean? It means that to meet all the conditions required to grow a crop or animal, on-farm investments must be made. Very often that means debt.

Since the word “debt” has many connotations ­— most of which make us shudder — it’s good to revisit the concept from time to time. Here we ask two advisors for their take on “good” debt versus “bad” debt and how to answer the age-old business question: What’s the right amount?

Mark Bratrud

Owner/consultant, Coyote Business Strategies

We’d all love to pay cash for everything, and that’s a great practice if you can do it. But the reality for many businesses — and farming is no exception — is that debt is usually required to facilitate growth.

Is there such a thing as bad debt? Yes, if there isn’t a solid plan to pay it off. Farm debt should be well thought out.

Ask yourself “Will this debt provide a return on investment that can service the debt through any situation?” If the answer is “no” or if it’s unclear, revisit your motivations for borrowing.

Purchasing land that adjoins your farm will require a longer-term outlook. A piece of equipment that you believe will improve production or increase quality is an opportunity for your farm. But you must also weigh the overall health of your farm to assess whether it can service that debt no matter what happens.

When assessing your farm’s ability to service debt it’s important to consider five-year averages, (even better: a five-year Olympic average), prorated to the size of the farm. Also consider worst-case scenarios. Ask yourself what would happen if there’s a major production problem for one year or more. Do you have the cash flow or insurance to continue servicing the debt? Frequently overlooked is whether the business can sustain the loss of a key person. What should you plan for to protect yourself in that situation?

Over the past few years, I have reinforced the need for my clients to consider economic trends and their long-term strategic plans when making debt decisions. Factors such as high inflation and high interest rates should be red flags to borrowers, indicating that it may be a risky time to take on debt. But it may not be that simple. Someone may take on debt because the piece of land they’ve always wanted is finally for sale.

To assess a growth opportunity as “good” or “bad” I suggest creating a cash-flow plan. The key is to be as realistic and accurate as possible. Look to the past to determine the future. Use trends to forecast where you will be in three to five years and how debt will affect your operation. To measure your risk, it’s a good idea to look at three scenarios: Optimistic, Average and Worst Case. Include interest rate risk in each scenario’s calculations. Over the last few years, too many farmers found out that a couple of percentage increases, particularly in revolving or operating debt, or anything with floating interest rates, can be a cash-flow killer, quickly turning what you thought was a sustainable investment into a real problem.

Debt for the “right” reasons is generally considered “good” debt, i.e., assets that follow appreciating trends, like land. However, it can turn “bad” if the terms of the debt are not sustainable, interest rates were not locked in, or the farm doesn’t have contingency plans.

The reality is very few farms can operate on 100 per cent cash. Debt is often required. Some of the more hawkish operators would say if you have zero debt you aren’t being aggressive enough. Younger business owners are more inclined to take on risk, and in most cases rightly so. Empires are built on hard work but also some risk and this often means loans to make big moves. Bottom line: different strokes for different folks as growth and success are not measured the same on each farm.

As an advisor I’m more inclined to consider debt for strong assets, such as land, termed out in a sustainable way that puts you in a position to build equity and doesn’t put your business in peril if things go bad.

I’m not a fan of operating debt or revolving debt. This is generally the most expensive and consequential debt if not managed well. I would liken it to credit card debt: it can have a purpose and be a useful tool but if you don’t plan on paying it off regularly it can get you in trouble. Don’t get me wrong: short-term management backed by inventory, or a solid insurance policy, can be a key management tool. If you don’t carry much long-term debt an operating line secured by farmland can be a cheap and helpful alternative. I say “cheap” because debt secured by a strong asset, such as farmland, will generally be 30 to 50 per cent lower than unsecured or inventory secured.

Cash advance programs can also be a great option but make sure you understand the repayment terms and that they don’t affect your overall marketing plan. I firmly believe that in business cash is king, but this doesn’t mean pallets of 50s in the back shed. Rather, it’s the ability to make decisions based on what gives your farm the best opportunity for success that’s not based strictly on cash flow.

Kim Gerencser

Management consultant, K. Ag Growing Farm Profits Inc.

Most decisions in life and business involve two huge components: facts and emotions. I’ve learned through 20 years of advising farmers that emotions rule the day.

But here’s a fact: there is such as thing as “good” debt and “bad” debt. Good debt improves short- and long-term results, provides clear, measurable and positive ROI, or positions the borrower for long-term success even if short-term results are difficult. In contrast, bad debt is impulse purchases, unnecessary items, or because “someone will approve the loan for this, so why not?”

All debt will affect cash flow. There is no getting around that. Part of what helps determine good debt over bad is the outcome: is the farm in an overall better financial position because of this debt? Can we predict that before the debt is taken on? We can, to an extent, but the reality is that things change, positively or negatively, when you are a commodities producer since so much is out of your control.

Good debt can turn bad if factors out of your control go against you; however, it has been more common for bad debt to work out because of prolonged commodity booms, record-low interest rates for most of the last decade and appreciating values of assets.

What is concerning is how rarely debt is part of a strategic conversation or plan. Often it is reactionary. And when new debt is reactionary, it increases the likelihood of being bad debt.

Over the last 10 years, we’ve seen demand for land and equipment increase dramatically. Triggered in 2007, western agriculture went through a renaissance of sorts. Farming became sexy. Attention, and capital, flowed.

New farm equipment couldn’t be had. Land sales were quick (if you were even fortunate enough to have land available to purchase or rent before the opportunity closed). Bin yards, shops and other infrastructure were being developed everywhere. It was boom times. But like all cycles, it could not last forever, at least not for everyone. Weather anomalies occur and markets find their new normal. But five-year financing on new equipment and 20-year financing on new land don’t care that cash flow and profit are less than they were when you made the purchase. Payments must be made.

After their best year ever, a former client of mine was being tempted by their equipment dealer to do a fleet flip. I discouraged them from taking this step. There were several points to my rationale, but I closed with “What if next year (2017) is more like last year (2015, when they suffered a significant financial loss) than this year (2016, their best year ever)?” Facts be darned, emotion ruled the day, and a fleet flip happened. The next year was a financial loss and there was regret around the table. What could be done when the equipment was now worth less than the debt on it? It was a tough spot. I took no pride in being right.

This is an example of reactionary rather than strategic debt. They made a medium-term (five- to seven-year) decision based on short-term (one year) results. Contingencies were not considered, nor was risk management.

If 2017 and 2018 had been average years, the decision would have looked brilliant. It is incredibly stressful to make that decision without knowing how the things you do not control (weather and markets) will affect you in the next three to five years. Good debt can become bad and bad debt can become good, but that can come from good or bad luck.

A business cannot grow without debt. But I’ve also seen businesses grow themselves to the brink of bankruptcy. Growth, and the debt that facilitates it, must be deliberate and planned. The question of ‘to debt or not to debt’ cannot be answered clearly. Like all major business decisions, there are many factors to consider, for example the following in order of importance:

• Does the debt fit within your short- and long-term plans?
• How will the debt affect your future borrowing ability? (Especially in the face of a crisis, e.g., your tractor blows up.)
• Does your risk management plan provide sufficient coverage should your profit and cash flow from operations fall below expectations?
• What is your sensitivity to interest rates, yields and prices?
• What is your exit strategy for this debt if things change?

To use a curling analogy, “the call to make that shot wouldn’t have been a bad call if you’d have made the shot.” Only in hindsight can we tell if the debt was good or bad. I’ve seen plenty of debts categorized as bad turn out fine because things worked out (e.g., great yields, strong markets, etc.). Unforeseen boosts to profitability and cash flow from higher yields and/or strong markets can insulate the effects of what would otherwise be bad debt.

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Jared and Leanne have 8.5 quarters of land with a value of $6,500 per acre. Of the 8.5 quarters — that’s 1,360 acres — 760 acres are held personally, and 600 acres are held by their farming corporation. Although they have successors for the farm operation, they want to ensure their sons are treated with an efficient transition of control.

Jared and Leanne approached Nathan Heppner, a chartered financial planner and chartered life underwriter and Erik Forbes, a registered financial planner, each with Forbes Wealth Management Inc. at Carberry, Man., to develop a plan.

Jared and Leanne have done an admirable job of building up off-farm assets, with $550,000 in RRSPs and $150,000 in TFSAs. In addition to the land, machinery and inventory inside the corporation, they have $1,100,000 of cash inside the corporation which is not needed for operations. Their ideal solution would be to have as much of the farming assets as possible go to Josh and Craig and all the financial assets, including the cash inside the corporation, go to Shawn. The question then becomes how to get the cash out of the corporation efficiently and fairly.

There are several ways the cash could be taken out of the corporation. The most straightforward way would be to draw down the cash via salary or dividends over the coming years and into the parents’ retirement. This would generate taxable income for Jared and Leanne. However, the corporation is already in a position where there are concerns about its status as a qualified farm business, due to the amount of passive assets in the farming corporation.

A more efficient option would be for Jared and Leanne to sell land they now hold personally to the corporation, for a value equal to or greater than the cash they want to strip out. Doing it at a greater value would give them a shareholder’s loan that they could use in future if more cash is built up.

Selling land to the corporation would also allow Jared and Leanne to utilize whatever lifetime capital gains exemption they have. They have never used any of it and after recent changes effective June 25, 2024, they should each qualify for $1,250,000 of exemption. It is worth noting that by moving land into the corporation, it can make it hard and costly to get it out later.

Assuming they take $1,100,000 out of the corporation and put it into their personal names, they can max out their TFSAs and put the rest into a joint non-registered investment account. They have $1,850,000 in personal financial assets they can use to sustain their retirement.

With the cash out of the corporation, Jared and Leanne want to pass the corporate farming operation on to Josh and Craig. This can be done whenever Jared and Leanne deem appropriate, by executing an estate freeze. Jared and Leanne would exchange their common shares in the farm for fixed-value preferred shares and have new common shares issued to Josh and Craig.

Josh and Craig both have their own farming corporations. Therefore, it would be best to have Jared and Leanne’s corporation shifted into Josh’s and Craig’s corporations. In practice it would work as follows:

Valuation and agreement: Obtain accurate third-party valuation for the assets being transferred. An agreement must be reached on the allocation of these assets to ensure each shareholder’s proportional interest is maintained.

Asset transfer: Transfer assets from Jared and Leanne Inc. to Josh and Craig’s own farming corporations. This transfer should be structured to defer taxes. It is important to make sure assets are transferred proportionally to share ownership.

Share exchange: Josh and Craig exchange their shares in Jared and Leanne Inc. for shares in Josh Inc. and Craig Inc. respectively.

Documentation and elections: Prepare and file the necessary documentation — that is, board resolution, shareholders’ agreement and tax elections.

Wind up: The distributing corporation is wound up or its shares are redeemed, completing the split.

With all corporate assets apportioned, cash is stripped out. All that remains is the personally owned land. After what has already taken place, Jared and Leanne believe it would be fair for Shawn to receive one quarter of personally owned land. The remainder would then be split between Josh and Craig. This transfer of ownership can be done at any time between now and the last of Jared and Leanne’s passings. The land can also be passed down at any value between the book value and the current market value. If Jared and Leanne have any lifetime capital gains exemption left, they should use it when passing land on to their sons.

Regardless of the value assigned to the land upon transfer, the parents should put a promissory note structure in place. Doing this will help to protect Jared and Leanne’s interest in the land, should the boys find themselves in financial difficulty or facing an estranged spouse.

Before a creditor or estranged spouse could stake their claim on the land, they would have to pay out Jared and Leanne’s interest. Another benefit of having a quarter of land transferred to Shawn is that it would allow him to utilize his lifetime capital gains exemption if or when he disposes of any land he may acquire.

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Maurice Torr, a rural real estate expert with Century 21 Westman Realty in Brandon, says it’s important for families to consider how to present farm property in the best light before putting it up for sale.

“It’s a matter of making your property presentable, making it appealing. People buy something because they like what they see. That’s why the presentation factor is always so important. You only get that one chance to make a first impression,” he says.

“When a farmer is retiring, (the farm) is his biggest asset and that’s going to be his retirement and you naturally want to maximize it. Well, you’re not going to maximize it if it’s not presented right.”

One of the first things to think about is the approach to the farm, Torr says.

If it’s summer, make sure the approach is clean and tidy and nothing jumps out at the buyer. Cut the grass on both sides of the road, get a junk dealer to remove any old machinery, remove oil or chemical pails, and give old buildings a fresh coat of paint and some new shingles.

“I remember many years ago I was going to a property and as I was driving up the road and there was a bunch of shingles missing off the roof. I thought, if the person isn’t on top of things to repair something like that, what else has he left?” Torr recalls.

“Whether it’s farmers or whether it’s people buying a house, it’s probably one of the biggest investments they ever make in their life. You want to feel good about that investment.

“If it’s untidy, the person coming in is going to say, ‘I don’t feel good about this.’ Consequently, unless they can get the farm cheap, they’re probably not going to bother.”

The right time

Tim Hammond, founder and CEO of Hammond Reality at Biggar, Sask., suggests to start planning for sale of a farm at least three years before listing it. That will provide enough time to complete repairs or upgrades and maximize potential tax strategies.

He says spring or summer are the best times to list a farm property, when the growing season is well underway.

“That’s absolutely the best time to showcase your farm,” says Hammond, who estimates farms comprise more than 90 per cent of the properties his company lists.

You may want to consider collecting video footage of the property to show prospective buyers. That means buying a drone for $500 to $1,000 to shoot the footage yourself, or hiring a reputable company to do it for you.

Hammond says video footage can help sell a farm, especially in the wintertime when it might be under a couple of feet of snow.

“Do the drone video in the summer. Take all kinds of video or pictures when it’s green, clean and shiny. That’s absolutely the best time to showcase your farm.”

To build or not to build

Torr recommends delaying any new building construction if you’re planning to put the farm up for sale.

“You may decide it’d be nice to have a workshop, so you’ll put up a heated 40- by 80-foot shop, but the guy who comes in after you may say that ain’t big enough for my combine,” he says.

“Everybody’s got their quirks. That can be a problem if you try and perceive what somebody else wants.”

A farmer may be better off applying a fresh coat of paint to existing buildings or replacing sections that may be damaged or missing to make them more presentable.

Infrastructure

Another priority is to make sure basic infrastructure is in proper working order before prospective buyers tour the property. Torr says that includes everything from grain handling machinery to the lift in the maintenance shop.

Along the same vein, make sure any on-farm facilities are relatively clean and organized in case someone wants to inspect their interior.

“Again, presentation is the key element if you want to maximize your price,” he says.

“It doesn’t have to be perfect. A working farm is an operational farm and you can never get everything perfect.

“If there’s a workshop, you want to be able to see the floor. You don’t want to go into a workshop where everything’s scattered all over the floor. Aesthetically, it creates a negative mindset.”

Farmland focus

Of course, no aspect of a farm operation is more important to a potential buyer than the farmland itself.

That’s why it’s so important it is as presentable as possible, Hammond says. You may want to look at underproductive or underutilized patches of land and consider how they can be made to look better or put back into service.

In the case of areas with highly salinized soil, there are two options: convert them to grasslands or install tile drainage. Grasslands are more aesthetically pleasing and can become a source of additional revenue if what is grown there is sold for feed. Tile drainage helps lower the water table, which draws salt from the surface.

While tile drainage is a far more expensive option, Hammond says more farmers are considering it.

“Once upon a time, it was the same value as farmland so people were hesitant to do that. But now, relative to the cost of farmland, it’s pretty affordable and the returns are there.”

Hammond also recommends burying rock piles and clearing bush to make it easier for the next person to farm and boost the price they are willing to pay.

For those who run a mixed farm with livestock and want to sell it as a grain farm, Torr suggests starting that transition while still farming the land. That will save time for the purchaser and show evidence of land productivity.

“People want to see action,” he says. “If it’s produced and there’s a good stubble, they know it’s OK, whereas if you’ve just worked it up, who knows? It’s kind of a crapshoot then.”

Farm machinery

Perhaps one of the most valuable assets of any farm is its machinery, from tractors and combines to sprayers and grain carts. But what should be done with that fleet when it’s time to sell the farm?

Torr’s advice is to not include it in the sale price. He recommends giving the buyer the option to buy machinery at separately negotiated prices, put it up for sale at an auction, or sell it yourself.

Prospective buyers may prefer a different manufacturer. Adding machinery to the sale will also substantially increase the price.

“If you can bring the price down by $1.2 million because you’re not including any equipment, it’s going to appeal to more people than it will if you leave it all in.”

Farmhouse

At one time, the house was almost an afterthought when a buyer was looking to purchase a farm. That’s no longer the case, says Torr.

“When I first moved here in 1987, there was a lot of those older, run-down, aging properties that people were making do with. They’d never known anything different.

“But we’ve gone through quite a transition in that respect with regard to living accommodations. It is now an important factor. The younger generation… are wanting almost as good a house as they would have if they lived in town.”

That’s why Torr says farm owners may want to consider home upgrades that enhance curb appeal. That can include a new roof or windows.

Renters

Farmers frequently put their property up for rent when they retire rather than immediately selling it.

Torr says that makes sense for many farm owners, but it can pose a challenge if the renter looks to buy it down the road and seeks a discount on the selling price.

If the renter is interested in buying the farm and has the financial capacity to do so, Torr recommends the current owner get an independent evaluation of the property. That way both parties know the fair market value.

He also suggests the two sides use a mediator to avoid potential disputes.

Keep records handy

Hammond says it’s often a good idea to keep farm records handy when a farm is put up for sale and make them available to prospective buyers if asked. Those can include data on farm yields, crop rotations and inputs used.

“Buyers always want to know, what did you grow out here for crops and what were the yields and the input history, what kind of chemicals and fertilizer did you put on it? To have that information prepared for a buyer, that’s really going to go a long ways with them,” he says.

Peace of mind

Hammond says upgrades made to a farm before sale may not always pay off.

“It’s the kind of thing that you don’t always know that you’ll get dollar for dollar back for your investment. But what it does is, it makes it more attractive to a buyer, which can facilitate a quicker transaction … and there’s the peace of mind just knowing this deal is going to happen.”

Still, Torr cautions that families must be patient when selling. It can sometimes take years for a transaction to be completed, which is why families plan for a sale while they are still farming.

The post Up for sale: First impressions count when selling farms appeared first on Grainews.

A report released by RBC on Tuesday titled “Farmer 4.0” estimates Canadian ag GDP could reach $51 billion by 2030, compared to $32 billion today “if the right investments in people and technology are made.”

“We believe Canada can once again be an agriculture superpower, and do it in a way that cuts greenhouse gas emissions, and supports thousands of communities that still help to define our country,” RBC senior vice-president John Stackhouse said in a release.

Before it can get there, the report noted, Canada is up against a “skills and labour crisis” in the ag sector, projecting a domestic shortage of 123,000 workers within a decade.

And by 2025, the report added, a quarter of Canada’s farmers will be 65 or older. Over the next decade 37 per cent of the ag workforce will be set to retire and Canadian youth “are not looking to replace them, with 600 fewer young people entering the sector every year.”

Canada’s share of global agriculture exports has also fallen, from 6.3 per cent in 2000 to 4.9 per cent in 2005 and 3.9 per cent today, “as developing countries like China, India, Indonesia and Brazil produce and sell more to the world,” the report said.

Also, it said, Canada imports more farm machinery than it makes, and its share of global ag investment — while still in the top five — is “only 3.4 per cent, behind that of India and Brazil.”

“We are growing our exports; we are growing our output. The problem is the rest of the world is doing it faster,” RBC’s senior manager of research, Andrew Schrumm, said on Thursday’s episode of Glacier FarmMedia’s Between The Rows podcast.

The future farmer, or Farmer 4.0, “will need to focus on strategy and systems, leaving past tasks to a new generation of smart machines,” the report said.

By the end of the 2020s, the report said, nearly two-thirds of job shortages in agriculture will require manually-intensive, lower-skilled tasks, for which the “immediate” solution will be to continue to lean on Canada’s Temporary Foreign Worker program, which could supply 27 per cent of Canada’s ag work force by 2030, up from 17 per cent today.

However, RBC said, “the eventual solution for many of these roles will be automation.”

Over 80 per cent of producers under the age of 40 report using technology, compared to 57 per cent for those over 60, the report added.

The report sees yet another agricultural revolution in progress, “where agricultural technology is shaping how and who works on the farm,” Schrumm said.

And Canadian farms, while already capital-intensive, will need yet more capital in coming years. The ag sector in Canada in 2016 held $510 billion in capital assets, over 80 per cent of which was in land and buildings.

For all that, the report said, farmers’ access to credit is “surprisingly low.” Canadian agriculture has a 1.9 per cent share of commercial lending nationwide, down from the global average of 2.9 per cent and well below countries such as New Zealand at 14.1 per cent.

And for all their “substantial capital wealth,” high operating and asset-servicing costs weigh on Canadian farms’ profitability, as expenses alone eat up about 83 cents of every dollar of sales, dragging on producers’ ability to invest in technologies or skills.

Overall, the report said, if Canada fails to “transform the way we produce food, and market it globally,” the ag sector will likely grow by only 1.8 per cent per year on its “current path of declining productivity,” bringing its output to around $40 billion in 2030 from $32 billion today.

“But if we accelerate the adoption of innovative technologies and embrace an ambitious skills agenda, our research indicates Canada’s agricultural productivity can get back in line with the recent 10-year average of three per cent. The payoff: another $11 billion of output, bringing agricultural GDP to $51 billion in 2030.”

The Farmer 4.0 report, Schrumm said, is part of a larger RBC study titled “Humans Wanted,” which explores how Canada’s workforce will need new skills “as technology permeates every task we take on.

“We think it’s a really interesting case study for the rest of the country to understand what’s happening in agriculture.”

Among its recommendations, the RBC report calls for:

• the federal government to spearhead a new “national skills strategy” for the sector, together with employers, workers, educators and industry groups, to plan for its future labour needs;
• a “bold” industry-led campaign to attract and retain more youth, women, Indigenous people and new Canadians in the sector;
• agriculture to be incorporated as a “key sector” in Canada’s learning strategy, increasing its exposure among “non-agriculture” students;
• major research and development initiatives, such as the Protein Supercluster, to be linked to education and skills development;
• reduced barriers to high-skilled immigration to agriculture and a dedicated service channel under the Global Skills Strategy;
• accelerated development of governance standards to increase access to data and insights on food production; and
• high-speed Internet for Canada’s remaining unserved 1.5 million rural and remote households within 10 years.

Education and skills development are in demand, the report notes, as 47.2 per cent of agriculture workers under age 40 have received a post-secondary or CEGEP education. Those with “only secondary schooling or apprenticeships” are decreasing in number.

Enrolment in post-secondary agriculture programs has seen a 29 per cent increase over the past decade, the report added, compared to a 21 per cent growth rate across all programs.

Aspects of Canada’s approach to ag skills development are “already groundbreaking,” the report said, such as the knowledge and “practical experiential learning” to which 30,000 students in post-secondary ag programs are exposed today.

It noted six Canadian universities (UBC, Guelph, McGill, Alberta, Saskatchewan and Toronto) today are in the top 100 agriculture and forestry programs globally, according to QS World University Rankings. — Glacier FarmMedia Network

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Data released by Statistics Canada on Wednesday showed 2017 farm equity climbed to $535.3 billion, up $34.6 billion from $500.75 billion in 2016.

“I think it points to an industry where we’ve come off of some good times over the past five-plus, 10 years, and we’re continuing to see a little bit of slowing on some perspectives,” said Craig Klemmer.

“But also, I think there is still optimism in the industry.”

While he projected a slowdown in growth, he said farm asset values will continue to appreciate.

According to the StatsCan report, farm asset value rose 6.9 per cent compared to the year previous, to $632.2 billion nationwide in 2017, mostly due to higher farmland values.

Farm real estate climbed by 7.8 per cent to $480.1 billion and now accounts for more than three-quarters of total farm asset value.

A recent FCC report showed farmland values rising by 8.4 per cent, so the two reports taken together indicate that investors are seeing opportunities, Klemmer said.

“I think, overall, where we’re sitting right now, is that we’re seeing a very balanced, stable market, where assets are increasing, revenue is increasing and debt is increasing, in kind of a fairly stable trajectory at this point.”

Market disruptions and trade concerns will affect farm revenue and need to be monitored, he said. As well, the Bank of Canada has said it will raise interest rates this year, which will increase the costs of borrowing and could stress farmers’ abilities to pay down debt.

But the farm debt-to-asset ratio points to a healthy industry, he added. That ratio reached 15.3 per cent in 2017, according to the StatsCan report, slightly above the five-year average of 15.2 per cent.

“So, I think there are some pretty good stories,” Klemmer said.

Nationwide for 2017, farmers recorded assets of $632.2 billion with liabilities of $96.9 billion.

Manitoba farmers recorded assets of $49.984 billion with liabilities of $8.981 billion; Saskatchewan farmers, $114.436 billion in assets and $14.663 billion in liabilities; and Alberta, $173.365 billion in assets and $22.375 billion in liabilities.

Farm inventory values also rose, contributing to the overall increase in asset values.

The total value of crops, livestock, inputs and poultry increased six per cent from 2016, to $47.3 billion. It marked the first year inventory values have increased since 2014.

Farm inventories of market livestock and poultry increased the most, rising to $8.7 billion, a 7.2 per cent increase from 2016. The increase was credited mainly to higher prices for calves, which rose 6.4 per cent, and steers, up 5.2 per cent.

Breeding livestock inventory values increased 5.2 per cent to $13 billion, on the back of higher prices for beef cows (up 4.8 per cent) and milk cows (up 4.1 per cent).

Higher year-ending stocks for canola and soybeans were cited as the main reason for the increase in crop inventory values.

Soybean inventory value rose 44 per cent, while canola rose 9.5 per cent, compared to 2016.

Those numbers point to the growing popularity and the high value of those two crops, Klemmer said.

Many farmers may be holding crops in their bins longer, waiting for better prices, he added.

Canola and soybeans made up 86.5 per cent of the 2016-17 increase in crop inventory value and 39.8 per cent of the total crop inventory values for 2017.

— Terry Fries writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.

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Bayer CEO Werner Baumann again threw his weight behind the deal, despite higher antitrust hurdles and delays in the regulatory reviews, speaking to shareholders at the annual general meeting on Friday.

“I’m convinced that this acquisition has very great potential for creating value for our company, our stockholders and our customers,” Baumann said, adding he expected the deal to be approved and closed in the near future.

If the deal is not closed by June 14, Monsanto could withdraw from the takeover agreement and seek a higher price.

The last major hurdle to clear is the go-ahead from U.S. regulators for the deal, worth US$62.5 billion including debt, but Bayer has already come to an agreement in principle on the terms of approval with the Department of Justice.

It has agreed to sell assets, which include seed, crop chemicals and digital farming activities, with revenues of 2.2 billion euro (C$3.33 billion) for 7.6 billion euros to rival BASF .

Combining with takeover target Monsanto will have synergy effects of about US$1.2 billion on adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from 2022, Bayer said — less than the US$1.5 billion targeted when the transaction was agreed in September 2016.

— Reporting for Reuters by Patricia Weiss; writing by Ludwig Burger.

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The potential deal comes as large grain traders that make money by buying, selling, storing and shipping commodity crops have struggled with global oversupplies. Thin margins have squeezed such trading operations, including those of ADM, Bunge, Cargill and Louis Dreyfus, which together are known as the “ABCDs” and dominate the industry.

Reuters, citing a source, reported last month that ADM had proposed a takeover of Bunge.

An ADM spokeswoman said in an email the company does not comment on “rumours or speculation.” Bunge declined to comment.

Bunge’s shares were up 4.9 per cent in morning trading. Shares of ADM, which is set to report its quarterly results on Tuesday, were up 1.4 per cent.

Any deal would likely face stiff scrutiny from government regulators and opposition from U.S. farmers who fear that handing more market control to ADM could hurt wheat, corn and soybean prices. The companies would probably need to sell facilities in North America, such as grain silos, to win approval for a deal, analysts said.

A tie-up could also spark a bidding war for Bunge with Glencore, which already made an unsuccessful approach to Bunge last year. Glencore could buy assets that ADM and Bunge divest as well. Glencore declined to comment.

Talks between ADM and Bunge come after a wave of merger mania has already swept through the U.S. farm sector. Last year, DowDuPont was formed through the merger of Dow Chemical and DuPont, and separately PotashCorp combined with Agrium to form Nutrien. Bayer is seeking to acquire Monsanto.

New York-based Bunge operates in more than 40 countries. Chicago-based ADM has customers in 160 countries and is the most U.S.-focused of the major grain companies. A takeover would help it grow in South America, where Bunge is a major agricultural force.

As of Friday’s close, Bunge had a market value of about US$11 billion, while ADM was valued at US$23 billion.

— Reporting for Reuters by John Benny in Bangalore; additional reporting by Tom Polansek in Chicago.

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Saskatchewan Court of Queen’s Bench on Thursday appointed Calgary-based insolvency trustee Hardie and Kelly as the receiver for Milligan Biofuels, which operates at Foam Lake, about 90 km northwest of Yorkton.

Alberta’s Crown lending agency ATB Financial had filed an application without notice Wednesday in Saskatoon to seek the hearing the following day.

Such applications, as a rule, are heard at least 14 days from the filing date, but lawyers for ATB, in their filing, described the appointment of a receiver as “a time-sensitive matter.”

ATB’s filing calls in Milligan’s debt of $490,331, mainly from a non-revolving reducing loan.

Milligan, ATB said, had granted the lender security over “the entirety of its assets,” largely in the form of a $6 million mortgage and general security agreement reached in 2011.

An affidavit filed Wednesday by Trina Holland, representing ATB’s turnaround and restructuring group, described Milligan as having “experienced financial difficulty over the past several months.”

Given “the circumstances and the nature of Milligan’s assets, it seems imprudent for ATB to await the passage of 14 days,” Holland wrote, describing receivership as the “only practicable remedy to preserve (Milligan’s) assets,” which include its equipment, machinery, land and buildings.

Milligan, which incorporated as Milligan Bio-Tech in 1996, worked with federal and university researchers to develop a “cold-crushing” system for biodiesel extraction from the oil of low-quality canola.

By 2009, the company had built and opened a biodiesel plant — the first such commercial-scale facility in Western Canada — with capacity to produce 10 million litres of fuel per year from up to 30,000 tonnes of canola.

A plant expansion in 2011 boosted Milligan’s production capacity to 20 million litres per year, requiring over 60,000 tonnes of distressed canola, sourced from across the Prairies and the northern U.S.

The company, which became Milligan Biofuels in 2012, also offered canola meal and canola-based derivatives such as diesel fuel conditioner, penetrating oil, rust inhibitor, road dust suppressant and “asphalt release agents,” used to clean asphalt-handling equipment. — AGCanada.com Network

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Farm sector equity totaled $500.3 billion for the year ending Dec. 31. That’s a 4.5 per cent increase, or $21.6 billion, from the same period a year ago, according to the report released Wednesday.

Farm equity — assets used to produce agricultural products, minus the liabilities associated with those assets — for the previous four years reached $478.7 billion (2015); $449.1 billion (2014); $407.5 billion (2013); and $365.6 billion (2012).

The $500.3 billion for 2016 represents the smallest increase year-on-year since 2009, StatsCan said in the report.

Every province except Newfoundland and Labrador (down one per cent), and New Brunswick (down 3.1 per cent) posted farm equity increases.

Total farm assets were boosted by a $27.3 billion (7.3 per cent) gain in farmland values. Farmland values rose in every province, with Prince Edward Island recording the largest gain at 13.2 per cent and New Brunswick posting the smallest farmland value increase at two per cent.

Decreasing values for livestock and poultry kept a lid on potentially higher farm asset values, with those sectors showing a $3.6 billion fall in inventory values. Cattle and calf prices were down 15.8 per cent in 2016 compared to the year earlier and were cited as the main reason for overall livestock and poultry decline.

Total farm liabilities increased $6.3 billion (7.5 per cent) to $90.8 billion.

Farms’ debt-to-asset ratio was 15.4 per cent in 2016, up from 15 per cent in 2015. That’s slightly below the five-year average of 15.5 per cent.

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