Prime farmland disappearing under development across Canada

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Published on Monday, 29 April 2013 02:26

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Foreign investment, urbanization, driving up land prices, cost of running farms.

By Jessica Bruno

Published in The Hill Times, Apr. 22, 2103

Canada’s limited amount of prime farmland is disappearing under subdivisions and strip malls, risking the country’s ability to feed itself, say experts.

“Ensuring that we hang on to our agricultural land is really key,” said Abra Brynne, a researcher with Food Secure Canada an umbrella organization for dozens of food banks, growers and community groups nation-wide. 

Between 1971 and 2011, urbanization consumed an area of farmland almost three times the size of Prince Edward Island. By 2001, about half of Canada’s urbanized land was located on the country’s “most productive farmland,” according to Statistics Canada.

Between 2006 and 2011, the amount of farmland in Canada fell from about 165 million acres to 160 million acres, though there is less land lying unused due to innovations in farming. Statistics Canada’s 2011 Census of Agriculture puts the amount of land usable for farming in Canada at 7.8 per cent.

“I believe it’s having a huge effect,” on Canada’s food security, said Ms. Brynne. 

Ontario has half of Canada’s highest quality farmland, according to StatsCan. Almost all of the rest is in Alberta, Manitoba and Saskatchewan. 

In southern Ontario, home to a quarter of Canada’s population, 16 per cent of the area’s farmland was swallowed by urban development between 1996 and 2001, according to a report by the David Suzuki Foundation.

“Southern Ontario has some of the best remaining agricultural lands in Canada in terms of soil fertility, crop productivity, and economic value,” stated the foundation in its report, Nature on the Edge: Natural Capital and Ontario’s Growing Golden Horseshoe, released in February. 

As prime farmland is paved over, farms have been forced to meet demand by using lower quality land to grow crops, according to StatsCan.

“Lower quality land is often unsuitable for stable, long-term, agricultural production,” the statistics agency states in its spotlight report on loss of farmland.

Low-quality land often requires more fertilizer and pesticides, is more prone to erosion and isn’t suitable for specialty crops like fruit, the report explained.

In 2005 provincial government in Ontario introduced land planning and created a greenbelt around Toronto, Hamilton and a number of other southern Ontario communities. It protects 1.8 million acres of wetland, forest and existing agricultural land from development. Under the greenbelt is a zone of about 232,000 acres that could be developed but is still mostly rural, dubbed the white-belt land.

Land in the white-belt is more than three-quarters agricultural, and much of it is classified as the highest-quality for growing, according to the Suzuki Foundation report.

There is planned further development into the white-belt into the tens of thousands of acres, according the report. 

David Amborski, professor at Ryerson University’s school of urban and regional planning, noted there have already been conflicts in local municipalities about how much development to allow in the white-belt land, and how much should be left as agricultural land.

“Land use regulation is something that municipalities and the provinces have control over. Each provincial legislature has its own planning act, and it’s the planning legislation that dictates the way the municipality controls what happens in terms of land use,” he explained.

The Suzuki Foundation noted a number of municipalities, including Toronto, Mississauga, Guelph, and Oakville, are considering expanding their greenbelt areas. 

“Further urban growth and development on prime agricultural lands in the white-belt study area should be avoided at all cost,” concludes the report.

Prof. Amborski said intensifying existing development has become a priority for municipalities in recent years, not just to preserve farmland, but to take advantage of existing infrastructure and services. 

But the pressure continues to allow development, said Ms. Brynne.

“It’s always a struggle, because a lot of people can make money when you throw up a whole bunch of different buildings and manage to find buyers for them. … Other considerations don’t always get factored in,” she said. 

One side effect of the greenbelt is an increase in land prices, said Prof. Amborski.

“Both land and single-family housing prices have increased dramatically. That’s because there’s a shortage of supply of these types of lands,” he noted.

Farmers are feeling the pinch as the lands surrounding their farms are developed, and property values rise, increasing their property taxes, noted Ron Bonnett, president of the Canadian Federation of Agriculture in an email to The Hill Times. Mr. Bonnett was in Japan last week attending meetings of the World Farmers’ Organization.

“It certainly puts pressure on farmland prices, with some areas of southwest Ontario seeing acres selling for over $20,000, while also covering over some of Canada’s most productive farmland assets,” he said.

“This has an effect on the decision-making of any farmer who has to factor in the cost of purchasing additional land, the debt servicing related to land ownership, and the increased rental costs as well,” he explained.

Foreign investment and investment funds’ purchase of farmland is also likely driving up land prices, the experts noted.

“We need to preserve it from urban encroachment and alternative uses but we’re also rapidly losing control of that land base because of foreign investment,” said Ms. Brynne. 

While Saskatchewan, Manitoba and Alberta have limits on the amount of farmland a foreign investor can own, ranging from 10 to 40 acres, Ontario, British Columbia and other jurisdictions do not. 

“There is certainly some loss of available land for ownership. These funds now own a few hundred million dollars of the $280-billion worth of farmland in Canada, in the hundreds of thousands of acres,” said Mr. Bonnett.  

In Canada, the average increase in farmland prices has been nine per cent since 2006, said Mr. Bonnett, which is twice as fast as the previous five-year period.

He said farmland has yielded triple the investment return of the Toronto Stock Exchange in the past 10 years.

“At the same time, farmland has seen very low price volatility. So, high growth and low volatility together present farmland as an attractive investment opportunity. These strong returns contribute to the demand we’re seeing, with investment funds starting to enter the Canadian farmland market,” he explained.

A Bloomberg analysis based on information from Statistics Canada found the price of farmland has increased by hundreds of percent between 2001 and 2011 in some provinces. In Manitoba, the increase was 115 per cent, in Saskatchewan it was 112 per cent and in Alberta the rise was 157 per cent. Canada-wide, the price of farmland was up 27 per cent between 2007 and 2011, and the average price of an acre is now $1,610.

Mr. Bonnett said the CFA is in the process of reaching out to the academic community to study the effect of foreign ownership and investment funds on Canadian farmland.

He explained it is putting Canadian farmers looking to buy land at a disadvantage, as some investment funds have access to un-taxed RRSP money, while farmers have pre-tax dollars.

“This is something we will be bringing to government as an immediate concern, as it directly compromises the competitiveness of Canadian farmers and aggravates the situation for new entrants to the sector,” he said.

Once farmland is developed, there’s no going back, said Ms. Brynne and Mr. Bonnett.

“This isn’t a temporary move. Once we develop over farmland it’s gone forever. I think Canadians need to consider the impact this will have on future productivity as populations grow and developers continue to look for development opportunities,” he said. 

“What people I think need to fundamentally realize is that it takes, depending on who you believe, anywhere between 100 to 600 years to build an inch of topsoil. It’s not something that’s readily replaced,” said Ms. Brynne.

British Columbia and Quebec have agricultural land conservation zones. In B.C., the agricultural land reserve created in 1973 sets aside 47,000 square kilometers, including much of the Okanogan Valley, almost exclusively for farmland.

But there is constant pressure to use the land for other things, like roads, said Ms. Brynne, who said she grew up on a farm inside the land reserve.

There also needs to be support to ensure the land actually gets farmed.

“One of the issues has been that we have agricultural land which has been so designated and is within a reserve that limits activities on that land base, but doesn’t ensure that actual active production on that land base is adequately supported, and that a farmer can make a living off of it,” she said. 

She said 2.8 per cent of B.C. land is farmable, but not all of it is in use.

The issue is complex, and whether legislation or regulation is needed to govern the use and development of Canadian farmland is needed is an open question, said Mr. Bonnett.

“This is an example of why Canada needs a national food strategy. This is a long-term, complex issue that cannot be addressed in one-off, short-term policy developments,” he said.

For Canada to have a self-sustaining food supply is extremely important, said Ms. Brynne.

“We have huge productive capacity across Canada if we pay attention to it. If we preserve the farmland and the fisheries and we adequately compensate those who are producing our food, then we have a lot of security in the long run,” she said.

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