Brady Deaton, Jr. Podcast Series: http://www.uoguelph.ca/fare/FARE-talk/index.html

twitter: @BradyDeatonJr

bdeaton@uoguelph.ca

Three Questions and a Surprise:

Farmland Ownership & Farmland Rental Markets

Three Questions

• Who owns farmland that is being rented to

farmers?

– How much farmland is owned by foreigners?

• Does the type of owner influence rental rates?

• Do farmers treat their own land like land they

rent in?

Non-farmer ownership of farmland is

a historic issue but remains important

• “In ___ the economists interested in agriculture put

together a discussion… [regarding] the rapid increase in

the system of land renting, the absorption of small

holdings by wealthy landowners…” See Barkley (2008)

• “The increasing separation between landowners and

farm operators is one of the major stumbling blocks for

policy makers when they try to design farm policy.” See

Schmitz, et. al (2010, p.16)

1897

Soil Conservation Also An Historic Issue

“I hold that ploughing beyond what is necessary… is

injurious to the soil….and this is one of the great

practical improvements belonging to the system I have

styled…” (p.86). Statement made by farmer in Upper

Canada circa ____.

– See “A History of Agriculture in Ontario” by G. Reaman, 1970.

1860

% of Farmland Rented

Source: Statistics Canada.http://www.statcan.gc.ca/pub/95-632-x/2007000/t/4129750-eng.htm

0

5

10

15

20

25

30

35

40

45

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

% F

arm

lan

d A

cre

s R

en

ted

Year

ON

MB

Canada

Method

• Introduction to Approach

– Area

– Sample

Study Area

7

Example of Data Collection Method

IPSOS Forward Data

Base of 16,905 Farmers June-September 2010

836 Farmers Contacted

501 Farmers

Participate

(60%)

333 Farmers Rent

(66% rent)

501

properties

399

102

Answer the Questions !

• Who owns farmland that is being rented to

farmers?

– How much farmland is owned by foreigners?

10

36%

19%

16%

10%

7%

5%

4% 2%

Ontario Landlords (Categorized by tenants who cash rent )

Rural Resident

Retired Farmer

Owner Invest

Active Farmer

Widow(er)

Invest Company

none of the above

Government

Observations 392 Research conducted with James Bryan and A. Weersink

Answer the Questions !

• How much farmland is owned by people who reside

outside of Canada?

Foreign Farmland Ownership in US and Ontario

Domestic 98.3%

Canada 34%

Netherlands 17%

All Other Countries

49%

Foreign 1.7%

Landownership in US Farmland and Forestland (Acreage)

Identified as In-Canada

99.03%

Identified as Out-of-Canada 0.97%

Ontario Farmland Ownership on Tenants’ Largest Parcel

Rented in (Number of Rental Contracts)

Source:

Nickerson, C.J., M. Morehart, T. Kuethe, J. Beckman, J. Ifft, and R. Williams. 2012. Trends in US farmland values and ownership. US

Department of Agriculture, Economic Research Service.

Nadella, K. 2013. An Examination of the Adoption of Conservation Practices on Owned and Rented Farmland in Ontario and Manitoba.

Msc Thesis. University of Guelph.

Answer the Questions !

• Does the type of owner influence rental

rates?

Landlord and Mean Cash Rent categorized by tenants who cash rent.

(2010 Survey Year n=392) (2013 Survey Year n=128)

Landlord Category % Mean Cash Rent % Mean Cash Rent

Rural Resident 36 102 Non-Farmer Inv.1 41 109

Retired Farmer 19 110 18 157

Owner Invest 16 97

Active Farmer 10 125 13 167

Widower 7 137 11 109

Invest Company 5 105 1.5 150

Other 4 108 14 109

Government 2 61 1.5 35

1. Rural resident and owner investor were collapsed into non-farmer investor.

**Little Evidence of Statistical Sig. See Bryan, Deaton, Weersink (2015)

Answer the Question!

53% 39%

7%

A survey of 810 farmers in Ontario and Manitoba

Yes

No

Don't Know

Refused

Do Farmers take better care of the land they own

than the land that they rent?

Testing the Hypothesis

Own Land Rented Land

Control for

1. Field Characteristics (Soil texture, topography, etc)

2. Crop Choice

3. Ag Improvements: e.g., tile drainage

Conservation Tillage

• If farmer indicates minimum till or no-till

was used on the specified parcel, then

they are considered as using

“conservation tillage.”

Cover Crops

1. Red Clover

1. Oats

2. Fall Rye

3. Oilseed Radish Fall Rye

Source:

http://www.omafra.gov.on.ca/english/crops/facts/cover_crops01/cover.

htm

Adoption of Conservation Practices in Ontario

0

10

20

30

40

50

60

70

Conservation Tillage Cover Crops

% A

do

pti

on

in

2012

Owned

Rented

Adoption of Conservation Practices in Ontario

0

10

20

30

40

50

60

70

Conservation Tillage Cover Crops

% A

do

pti

on

in

2012

Owned

Rented

Surprise?

2014/15 Interview Results

• 59 surveys

• 24 York, 19 Durham, 10 Simcoe, 4 Kawartha Lakes, and

2 Peel

• 41 stipulations received by 22 tenants

Crop Fertilizer/Manure Herbicide Tillage Drainag

e

Pesticid

e Total

Selectio

n

Cover

crop Rotation Quantity Type Timing Quantity Type

Minimum

tillage

Tile

drainage Type

19 4 1 3 2 1 3 2 3 2 1 41

Tenants’ Opinions of Why Landlords Stipulate Landlords require tenants

to avoid planting hay,

which produces a habitat

for bobolink.

0

2

4

6

8

10

12

Protectdevelopment

potential

Environmentalconcerns

Erosion control Lifestyle Combatexternality

Deter wildlife Preserve soilhealth and

fertility

Tenant'srecommendation

Raise rent

Summary

• Rental market is price competitive.

• In general foreign ownership appears to

be a very small percentage.

• Farmers more likely to treat rented land

like their own if renting for a longer period

of time.

• Anecdotal evidence that some landlords

development interests may be inconsistent

with policy in urbanizing areas.

Land Rental Agreements & The Environment

Bruce Kelly, Farm & Food Care

Environmental Program Manager

#FarmSmart16 @FarmFoodCareON

Who is Farm & Food Care Ontario?

• First coalition of its kind, whole sector approach – all types of farmers and associated businesses working together.

• Funded by members, sponsors, projects.

• Common goal – building public trust in food and farming

1) Have a written lease;

2) Have it be a long term lease;

3) Have environmental clauses in the lease.

Opportunities to Improve Soil Quality on Rented Land

A Written Lease

• Legal Names

• Property description (Lot, Conc)

• Length of rental term

• Rental rate (or formula)

• Date of payment

• Date and Signatures

Only a year?

A LOT CAN HAPPEN IN A YEAR

A Long-Term Lease

• The longer a farmer has rented

land, the better it is cared for.

• 3- 5 year lease agreements

• Compensation clause in case of

early termination of lease?

• Offering renter the right of first

refusal?

What if?

• Soil testing

• Building organic matter

• Fertiliser use & timing

• Crops & crop rotation

• Tillage practices

• Stipulate practices not results, due to unpredictability

Every year the owner and renter discussed cropping practices?

Stipulations

• To maintain a crop rotation of corn-soybeans-winter wheat with no-till following the beans and corn. Minimal till after wheat harvest to prepare soil for planting cover crop (radish, oats, peas).

Stipulations

• To apply supplemental manure to fields meeting rates within soil/crop nutrient needs.

• Liquid manure must be applied along with soil disturbance or injected

• All applied manure must be incorporated within 24 hours

• Manure may not be applied to frozen ground or to land where it may flow overland into a watercourse prior to incorporation

One landowner agreed that the year his field was rotated in hay, the rental rate would be reduced by 20%.

- M. Carolan

• Had been outbid by opportunist farmer • 3-4 years of cabbage ruined the Fox sand • No one else would rent it after that • Landowner paid him to rehabilitate field • Put to hay with manure for a few years • Renting it ever since

Larry Davis Brant County OFA Director

FARMER STORIES

• 15th bid on a neighbour’s 100 acres

• Made his pitch with a Power Point presentation in their living room

• Photos of no-till & cover crops building soil on his farm

• Struck a chord with them & didn’t even discuss the rental rate

• Later started share cropping

FARMER STORIES

Mike Strang Huron County IFAO Director

Opportunities to Improve Soil Quality on Rented Land

1) Have a written, longer term lease;

2) Consider environmental clauses in the lease

3) As a minimum: have an annual discussion about • Agronomic Practices • Fertiliser use & timing • Crops & crop rotation, Tillage practices

ELMWOOD March 1 BRODHAGEN March 2 DELHI March 3 PARKHILL March 8 THAMESVILLE March 9 LEAMINGTON March 10

9:30-3:30 Includes lunch

Building soil health Erosion control

Local farmer experience Cost-share information

FREE SOIL WORKSHOP

Space is limited. Register online by February 26th www.farmfoodcare.org/events

Thank you!

www.FarmFoodcare.org www.RealDirtonFarming.ca

Want to contribute your story?

Bruce Kelly bruce@farmfoodcare.org

Mel Luymes mel@farmfoodcare.org