The price of land risks suffocating our agriculture

The explosion in the value of agricultural land is well documented, and one of the benefits of the current National Consultation on the Future of Agricultural Land is certainly to draw attention to this phenomenon. But do we really understand the danger that this serious trend poses to our small agricultural territory? The fact is that, when we compare ourselves in this regard, we do not console ourselves, we feel sorry!

Indeed, it is in Quebec that this land inflation is most marked. From 1984 to 2022, the average price of agricultural land has increased by 16.4 times and by “only” 6.3 in Canada as a whole. Currently, this average price exceeds $40,000 per hectare in certain regions, which is a major obstacle to the succession and diversification of our agriculture. It should be noted that many farmers are ready to pay this level of price and thus themselves contribute to this inflation.

Normally, such prices would be a sign of the vitality of a sector, the effect of strong real or expected profitability. But a detailed examination shows the dark side of agricultural land inflation here. The real question is how many years of good harvest is equivalent to the price of land. In Montérégie, one hectare was worth 14.5 years of corn harvest in 2022, the most profitable production, while in southern Ontario, only 8.2 were needed.

In addition, the fact that in Quebec agricultural producers are more owners of their land than tenants, i.e. 85% compared to 60% in Canada as a whole, has a considerable impact on their level of debt, stronger than anywhere elsewhere. Result: the interest cost represents on average 7.1% of the value of the production of a Quebec farm compared to 4.2% in Canada as a whole.

Is such a level viable in a context where climate change and global geopolitics pose unprecedented risks to the survival of many farms? We believe not. There is currently a real risk of suffocation of our agriculture which would become less capable of diversifying, closed to succession and concentrated in the hands of large owners, most of the time farmers themselves.

There are in fact, in Quebec, more and more of these large agricultural estates, the only ones capable of paying the current price of the best land, because, on their scale, this remains a marginal cost. Thus, the 350 largest landowners in Quebec currently own 14% of the agricultural land compared to 10% in 2007.

It is not an evil in itself that some farmers are more successful than others, but this concentration has deleterious effects on land occupation, agricultural succession, crop diversification as well as on quality. soils and watercourses due to the intensivist model that this induces. The average farm, the basis according to us, and also according to COP28, of the vitality of any agricultural model, is the big loser from this headlong rush.

Are there any solutions? Certainly. Like other participants in the current consultation, the Jean-Garon Institute recommends the review of our agricultural programs and policies, in particular the Agricultural Income Stabilization Insurance and supply management which, while beneficial, they are, cut off our producers from market signals and promote concentration. The price of land then becomes less problematic since “artificial” profitability is assured.

Land rental, which limits debt and frees up capital to invest in the land, should be governed by legislation requiring transferable long-term leases. This would allow the tenant to recover his investments in soil improvement over time. Strong tax measures could discourage the encroachment and underutilization of agricultural land, which would increase land availability.

Finally, if nothing helps, state intervention to limit the price of agricultural land and the size of large estates should not be excluded, despite the perverse effects of such dirigisme.

The challenge is major, and we can only hope that the current National Consultation on the agricultural territory will enable us to take it up with courage, certainly thinking of our own food security, but also that of those who follow us.

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