The price of B.C. farmland has started to fall, but farmers say it’s still so expensive that they must look outside the province if they want to expand their businesses.
October 4 Farm Credit Canada data revealed that B.C. was the only province in the country where farmland value fell in July compared with January.
B.C. farm prices dropped 0.9% in July while comparable land Canada-wide rose 3%. It was the FCC’s fifth consecutive semi-annual assessment where the change in B.C. farmland value lagged behind that in the rest of Canada.
B.C. farm value appreciation had been ahead of the rest of the nation for years, so farmers say depreciation is long overdue.
Statistics Canada agriculture analyst Stephen Partridge calculated the average value of an acre of B.C. farmland at $4,091 in 2008, although farmers say quality Lower Mainland farmland can cost more than 20 times that.
“Expansion in B.C. is tough,” said Richberry Farms owner Peter Dhillon, who is Canada’s largest cranberry farmer.
He bought 1,000 acres of cranberry bog in Quebec this summer after buying 350 acres there in 2008. He now owns more than 2,000 acres of farmland, including more than 650 in B.C.
“Agricultural land affordability in B.C. has been an obstacle for us,” Dhillon said. “It’s been hard to make sense or to rationalize the cost of the land, given that we would have development costs and then try to make a business out of it. It’s more expensive than it has been for us to go back east.”
Houweling Hothouse Group has similarly expanded its greenhouse operations in California instead of buying more land in B.C.
The tomato and cucumber producer, which launched in Delta in 1985, increased the size of its California operations by 40 acres last year. It now operates greenhouses on 124 acres of land in California and 50 acres in B.C.
“Greenhouse operators are expanding, but not in this province, not in this country,” said Bill Zylmans, who owns W&A Farms in Richmond. “They go to the U.S., where states welcome them with open arms. Input costs are lower there. They need less energy.”
Port Metro Vancouver bought the 215-acre Gilmore Farm in Richmond last year for $20 million, or about $93,000 per acre, and was allowed to remove the land from the agricultural land reserve (ALR).
Zylmans remembers when his family tried to buy the property in the 1970s, when it was priced at about $3.6 million.
“People who have been buying agricultural land in B.C. in the past 10 years have been speculators and people with offshore money,” Zylmans told Business in Vancouver. “Farmers can’t afford to buy agricultural land in this province at the price it is now.”
Zylmans and his family own about 95 acres of farmland in Richmond and 180 acres in Delta. He rents his Delta land to other farmers so he can focus on his Richmond operations.
He farms his Richmond properties and rents a further 400 acres of Richmond land. Except for a small parcel that he rents from a farmer’s widow, all of Zylmans’ rented Richmond land is owned by people he described as speculators and offshore investors.
“It’s viable for me to lease land,” Zylmans said, “because if the speculators who bought the land don’t have it farmed by a bona fide farmer, they’re going to have to pay a speculation tax.”
That “speculation tax” is the higher rate owners pay for farmland that’s not farmed.
But the differential taxes are insufficient to keep speculators from leaving land idle, according to Donna Passmore.
The Farmland Defence League of B.C. campaign director said many speculators leave land idle, because it helps them get it out of the ALR.
One age-old trigger for removing land from the ALR has been to claim that a landowner has been unable to turn a profit from his property for six years.
“The land left idle creates an impression that B.C. has far more farmland than it needs,” Passmore said.
“[This] creates a perception problem that leads politicians like [Surrey Mayor] Dianne Watts to constantly harp about all the excess and idle farmland.”