B.C. ranchers and farmers are positioning themselves to meet higher demand for local farmland, driven in part by expected food and water shortages, a new land assessment report says.
Although overall agricultural land sales are sluggish, when farms do sell the buyer is often the farmer next door, Landcor Data president Rudy Nielsen said in an interview.
This “rapid consolidation” will create larger, more profitable farms that will increase in value as climate change reduces the amount of arable land, states the Landcor report.
Landcor has built a database with information on all 1.7 million properties in B.C. through a direct relationship with the B.C. Assessment Authority.
“We have what the world craves but increasingly lacks: arable land, green and clean breathing space,” Nielsen said in the report, which raised the doomsday scenario of “food riots” and “water wars” should farmland become overly scarce in the future.
Mid-size ranches, with between 100 and 300 head of cattle, are being bought up and becoming part of larger ranches that have between 600 and 1,200 head of cattle, said Kevin Boon, general manager of the B.C. Cattlemen’s Association.
A trend toward consolidation also exists in other food producing sectors, particularly among mid-size farms, which have the biggest challenges because they are dependent on the income, but don’t see any of the economies of scale, said Reg Ens, executive director of the B.C. Agriculture Council.
Landcor pulled all B.C. land titles tagged as food producing (cattle to poultry to pulses) and tracked the changes since 2007 to create the first quarter 2013 report.
Research found that there are about 52,427 agricultural land titles in the province, with a total assessed value of $10.2 billion.
The total number of agricultural properties changing hands has dropped markedly since 2005, the report states.
“Sales volumes are down but we believe it’s not due to buyer indifference but hoarding,” Nielsen said.
“Unlike, say, condos where zoning changes easily beget more titles, agricultural and recreational land is finite and titles are comparatively few and — year by year — are becoming more exclusive and increasingly desirable.”
Desirability was reflected in price. The average sale price has almost doubled, up from $479,044 in 2007 to $939,617 in 2012.
“Basically, those who own B.C. agricultural land titles seem to be increasingly less willing to sell and when a title does sell, it commands increasingly more,” Nielsen’s report states.
Over that same time period, the average price of a single family home in Vancouver went to $1,114,026 from $587,972, while the increase in other areas was much smaller. In Kamloops the average price went to $352,323 from $198,802, in the Okanagan it went to $444,160 from $311,123, while in the Fraser Valley it went to $597,699 from $392,462.
Smaller farmers often have another job that supports a hobby farm, while larger farms can see economies of scale in technology, labour and other expenses, Ens said.
If farmland does increase in value due to its food production capacity, rather than its potential for condominium development, it could possibly take pressure off the Agricultural Land Reserve.
“If we didn’t have the Agricultural Land Reserve, I don’t know what kind of agriculture we would have in the Lower Mainland,” Ens said. “There’s huge speculation. There are lots of people speculating on land.”
Meanwhile, the Wall Street Journal reported in May that retail beef prices are expected to break records this summer after years of drought, which has shrunk cattle herds in the U.S. to their smallest level in 60 years.
The costs associated with raising cattle have gone up, Boon said, while international demand was down until recently because of bovine spongiform encephalopathy (BSE), commonly known as mad cow disease. Many countries did not accept Canadian beef after 2003 when the first case was discovered, and foreign markets are only now starting to open up again, Boon said. At the same time, global supply has shrunk due to the U.S. drought, competition for the land for ethanol production and the higher costs of feed grain, Boon said.
B.C. does not have a lot of arable land because of the mountainous terrain, Boon said, adding that there are predictions that food production will have to double by 2050 and Canada will be one of only six countries that produces more food than its people consume.
“We will be in a unique position to supply world demand, if we are able to position ourself to boost production,” Boon said.
So far, foreign ownership is not an issue for agricultural land in B.C., the Landcor report says. “Interestingly, the market remains (for now) ‘paid in B.C.’ with very few foreign buyers. The majority of buyers’ addresses registered with BC Assessment have Canada provincial postal codes, lawyers’ file cabinets notwithstanding,” the report states.
Nielsen believes that in the future, water will be fought over more than oil. And of course, water is crucial not only for drinking, but also for growing food for both humans and livestock.
“Simple scarcity and the miraculous ability to produce food, wine grapes and other high-value crops within cost-efficient reach of major urban centres such as the Lower Mainland will only increase the appreciation of, and for, B.C. agricultural land,” the report states.
Last fall, The Vancouver Sun reported on a Re/Max report that found that quality Fraser Valley farmland typically sells for $40,000 to $60,000 an acre, compared to just $3,000 per acre in Ontario.
Part of the reason for the high prices is the yield; Fraser Valley Re/Max agent Alex MacDonald told The Sun at the time that farmers can get four crops here each year because the growing season is much longer, while farmers can only get one or two crops each year in other parts of the country.
The Re/Max report also noted that farms have increased in size, with most parcels offered for sale of about 20 to 50 acres in size “being snapped up as an add-on to existing operations.”
Ens said he would like to see a 20- to 50-year agricultural food strategy for B.C. that would serve as a vision for the province and deal with topics such as importing food versus growing our own, protecting land for agriculture and making it viable for farmers to survive, as well as environmental issues.
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