“The price of land in the region has doubled in three years and practically tripled in eight years,” notes Christian Taillon, co-owner of the Taillon farm in Saint-Prime.
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At this price, established producers can afford to purchase a small plot of land from a neighbor, say 50 acres, but the land becomes inaccessible to the next generation of farmers.
“Young people can dream of becoming a doctor or lawyer, but they will not be able to dream of becoming a farmer unless they are born into a farming family,” claims the producer, unless they become a gardener on a small plot .
Christian Taillon and his brother Daniel are nearing retirement and have been carrying out succession planning for several years to ensure the sustainability of the organic dairy farm and its 1,700 hectares of land (in addition to operating another 300 hectares for rent).
“We cannot ask the two young people who take over the land 10 or 12 million dollars for land, otherwise they will die!” We are obliged to make a good donation to ensure the future of the farm,” states he firmly.
Donations in the millions
Same story at Nordan Farm, where Daniel Bergeron, 62, began the selling process to Timmy Gauthier, 24. “I have owned 30% of the company’s shares since October 2022 and the buyout process should be completed by February 2025,” emphasizes the young man.
Finding a replacement outside the family is not an easy task. The Nordan farm is also the only dairy farm in the region to have found independent succession in Saguenay-Lac-Saint-Jean in the last two years, says Daniel Bergeron proudly.
However, the latter had to make significant concessions to allow a young person to settle on a farm with 60 dairy cows and 350 hectares of land. “I had no choice but to take a package deal to respect the company’s solvency,” he said. I didn’t want to suffocate him when I left.”
The producer would rather keep the century-old farm running than pocket hundreds of thousands of dollars more.
“For me it is a unique opportunity that I couldn’t turn down,” says Timmy Gauthier, happy to take on this agricultural legacy.
Last spring, Nordan Farm purchased a piece of land listed for sale by its neighbor for $6,000 an acre. “That’s six times more than 20 years ago,” notes Daniel Bergeron, adding that the company has to pay $1,500 more per hectare to properly drain the land.
Despite the high price, we had to take advantage of the opportunity because the prices won’t go down that quickly.
A financial product?
According to the Union of Agricultural Producers (UPA), “in 2022, 50% of acquisitions of companies in agricultural areas were made by non-farmers,” says an open letter from President Martin Caron. In 2012 this share was only 12%.
“We’re seeing more and more transactions over 300, 400 or 500 acres. “We are talking about investments worth millions, but we don’t know who is buying this land,” fears Christian Taillon, who would like to see a public register created.
As prices rise, rental prices also rise. “Ultimately it is the consumer who pays,” he believes.
The increase in land values means that the market value now exceeds the agronomic value. In other words: the income from crop rotation does not allow the repayment of the conditions for the purchase of the land.
“There are some great companies that can’t find buyers,” fears Daniel Bergeron.
According to the latter, only a handful of farmers or investors will benefit from the situation if they get their hands on a larger share of agricultural land. “Is this really the agricultural model that we as a society want?” asks Daniel Bergeron.
According to Farm Credit Canada, property prices rose 11% in Quebec in 2022, with an increase of 19.2% in the Mauricie-Portneuf sector and 14% in Saguenay-Lac-Saint-Jean. The value of land varies greatly from region to region depending on what crops can be grown, but across the area land prices are skyrocketing.
At this rate, producers can hardly buy an agricultural asset as land becomes more of a financial instrument, estimates Nicholas Tremblay, an egg producer based in Saint-Ambroise. “The land should be a tool to feed people,” he says.
We cannot blame producers who choose to sell at a high price, because the quantity received is the result of a lifetime’s work, but the sky-high prices create distortions that are transforming agriculture in Quebec.
“If just one of my three children wants to take over my farm, which is worth, say, $5 million, the other two want their share too,” notes Nicholas Tremblay. For some people it is sometimes easier to sell and share the income.”
When it comes time to buy land, producers must also view the decision as an investment, says Guillaume Dallaire, co-owner of the TournevenT farm in Hébertville. “It’s not immediately profitable, but it will be profitable when it comes time to sell the land 10 or 15 years later.”
In addition, banks offer loans without principal repayment for a certain number of years to support producers. However, this approach has perverse effects as it contributes to increasing property prices, emphasizes Christian Taillon.
A basket of necessary solutions
It will be necessary to develop a basket of solutions to limit the impact of speculation on agricultural land prices, estimates Mario Théberge, president of the UPA Saguenay-Lac-Saint-Jean.
Quebec’s Ministry of Agriculture, Fisheries and Food (MAPAQ) also launched a comprehensive reflection on agricultural issues this summer, focusing in particular on access to agricultural land for succession.
Some promising ideas have already been put forward. For example, an agricultural social service fund, the Fiducie UPA-Fondaction, was launched in 2020. The first transactions were carried out in 2022 and six land purchases were made in Mauricie, Montérégie and Saguenay-Lac-Saint Jean.
“If there were no problem with land prices, we wouldn’t exist,” explains the trust’s general director, Marc-André Côté, immediately. To support the creation, expansion or transfer of a business, the Trust may purchase available land and enter into a long-term lease with producers.
The trust allows producers to reduce their debt. In addition, the lease agreements provide for an annual indexation of the rental price, which is significantly lower than the increase in the cost of land, which is beneficial for the producer. This model has existed for decades in other Canadian provinces and in Europe and deserves to be known in Quebec, assures Marc-André Coté.
The TournevenT farm was able to benefit from the help of the UPA-Fondaction Trust in particular in a very specific context, as the land, which belonged to a trust for the next generation of farmers, was for sale at the 2017 market price, i.e. half the price current price. “We could have bought the land, but we had to make large investments in our buildings,” points out Guillaume Dallaire, who emphasizes the importance of such tools.
At meetings of the Federation of Young Agricultural Workers of Quebec, there was also discussion about bringing the price of land back to its agronomic value, explains Timmy Gauthier. Given that the value of the land in southern Quebec exceeds the agronomic value, the majority of producers rejected this proposal because they did not want to suffer a loss in the value of their assets.
Among other things, the FRAQ notably proposed a tax credit for buyers and regulations on unused land.
The UPA and FRAQ are also advocating for the passage of an anti-speculation law, like the one that has existed in Saskatchewan for two decades. Regardless of the tax instruments chosen, the Quebec government must make important decisions to curb speculation in agricultural land.
All producers met are convinced that society must participate in shaping the agriculture of tomorrow. “This is an important debate for future generations,” believes Nicholas Tremblay, who hopes that agriculture does not become elitist.