NFU report calls for restrictions on foreign and corporate ownership of Canadian farmland

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When NFU President, Jan Slomp, complains about the "monetization" of farm land, he should be blaming his fellow dairy farmers instead of corporations and/or non-farm investors.

If it wasn't for supply managed farmers using the benefits of 200% tariff barriers to drive farm land prices into the stratosphere, and to a lesser extent grains farmers doing the same thing because of ethanol mandates, there never would have been enough of an increase in the value of farmland to attract outside investors in the first place.

Institutional farmland investors are simply a symptom of a problem created by farmers and governments which pander to the sort of agricultural protectionism the NFU adores.

Stephen Thompson, Clinton ON

Was not this about the same time period that the feds capped quota which led to a substantial increase in land value? Yes it was.

This was also the same time when the central banks began their bond purchase program which removed the price discovery mechanism from the bond market, thereby creating artificially low interest rates.
I must also add that these so called investors are the highly speculative type IMO, when for example there are much safer and better returns out there.
Here are 2 examples.
1). Kimberly Clark (KMB), which is a consumer staple that has raised its dividend for 40 years, and the last 10 have seen 9.5%/year. This stock trades at 20.6 times earnings and yields 3.3%
2). Johnson & Johnson (JNJ), in the health care sector, has raised its dividend for 50 years, the last 10 years has seen an 11.7% yearly dividend increase, trades at 15.3 earnings and yields 3.3%

Raube Beuerman

"By definition, we could never buy a piece of land for an uneconomic price"

I know of no piece of farmland within 100 miles of where I live that is economical.
One hundred acres recently sold south of me a few miles for $18000/acre.
Even on land that is debt free, a farmer these days is doing well to net profit $250 acre at todays prices. That puts that farm well over 50 times earnings.
These so-called investors will be looking for a return on their money.
Where will it come from?

Raube Beuerman

What price are you waiting for..... sell!

If that is correct, then who is the greater fool, those who buy at those prices or those who won't sell? One farm would probably use up more than use up your capital gains allowance.

Purshasing real estate strictly for investment purposes is not what I did when I bought in 1996. I never thought of my home with 50 acres as an actual investment.....more as a cost of living. I only wish today's 20-something potential farmers had this opportunity rather than compete against actual investors, many of whom are farmers who don't need any more land.

I bought my farm with buildings because it is what I wanted, but I would never think of it as an investment like I do with my stocks.

Raube Beuerman

Raube ,you have more than one farm, and since you claim farmland is a poor investment compared to stocks then perhaps you need to exercise your capital gains deduction now before farmland drops below your $18,000/ac. neighborhood value. Why not take your own advice and use the balance and invest in your more profitable stocks?

1). As I stated in the previous post I don't view my primary residence as an investment in the same way as stocks. I need to live somewhere.
2). In 1996 I paid market value for this farm (I had to since it was incorporated previously), yet was able to make ends meet with mediocre off farm income. Show me anyone who can come close to doing that today without very high off farm income.
3). If I was drinking my own kool aid, as this anonymous poster suggests, I would be buying land for $16-18000, but I am not.
4). Why does not the anonymous poster above share the amount of land(quota?) and/or other investments they have.

Raube Beuerman

Most people don't need 50 acres for a house ? You may not of intented it as an investment but that is excatly what it has become and it is the same for most of us.

Seems he might be confused and does not realize that his house is assessed seperate from his land .

We are all well aware that you don't believe $16-$18000 land prices are not a good investment and that land values could perhaps be topping.
In fact, you have said elsewhere on this site that well chosen stock investment makes far more sense than investing in land (or perhaps even keeping over valued land). I would suggest, if you do make the correct stock choices your theory could be correct! You have also said you own a second farm. The question is, why not, take your own advice, sell it for $16-$18000 per acre, use up your capital gains, as you have suggested elsewhere on this site and invest the proceeds in your more lucrative stock portfolio? Sounds like a great idea doesn't it or are their hidden pitfalls?

Beuerman's note: The author of this comment should sign his or her name and re-submit.

Raube Beuerman

cheap shot by anonymous poster deleted by editor.

It must mean 50 times earnings is not enough.
Many people can't sell stocks at tops either.

From feeding hogs !

Nobody should able to buy over 500 acres south cookstown in ontario

Nobody should able to crop over 3,000 acres and own more half that 500 acres is not enough on second grade land

Large farms are the only way we can compete with the U.S. and other parts of thw world. Useing your thinking farmers would have go to college to buy a farm.

News flash!
Anyone in Canada who thinks for "one second" that Canadian grain farms, either large or small can compete with the U.S. Farm Bill ARC is absolutely dreaming in technicolour.

Want proof ? See: view video of session 15.

I seem to recall reading that over 50% of cropland in the Mid-West States is now owned by non farming investors.

Only when some farmers realize that they could grow their net worth faster by parking money in solid companies will the price of farmland come down(or a 2% interest hike). Until then it appears that the rural population will continue to decline as Wingham radio stated today on the news.

Raube Beuerman

Sell the one farm get the quota money that's out there in over flowing pockets,put up a chicken barn and buy quota on home farm and play it out ,if quota goes government will pay you back for sure they have had it rough SM

With the utmost of respect, it's hard to tell if the above poster is being dead-serious or tongue-in-cheek by proffering a solution which appears to be that of pouring gasoline on an already raging inferno.

It's bad enough that the so-called "winners" in the new-entrant programs seem to see nothing wrong with the financial equaivalent of going "90 miles per hour down a dead-end road", it would be even worse if everyone was to think this way and, alas, it appears that too many do.

Managing risk responsibly is an attribute of a good manager - being reckless is not.

Stephen Thompson, Clinton ON

Even if I wanted to be a supply managed farmer(which I don't), the numbers don't work.

Say for example I had a million to put down to get into birds, which would have a total cost of about 2.3 million for 14000 birds including barn, my monthly mortgage payment comes in at over $5000 (3.85% over 25 years), which secondly, is longer than i would like. If I understand correctly, 14000 birds would have a net profit of close to 5g a month if one was free of debt. A break even scenario even after throwing a million at it.
That is also assuming interest never rises and quota stays around.
I'll pass.
Raube Beuerman

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