Farmland prices hinder gains in food security
The cost of small-acreage farmland in Metro Vancouver is two- to seven-times higher than that of large farms and is priced well beyond its value as agricultural land, according to a new report by Vancity.
In fact, the ability of farmland to support agriculture has little, if any, effect on the value of farmland in Metro Vancouver, which rises with the value of residential land and proximity to urban centres.
With prices for fresh vegetables up 26 per cent between January 2015 and January 2016 — and projected to keep rising — the eroding viability of farming in British Columbia is a concern. B.C. is highly dependent on imported fresh foods, especially from California, which has suffered from extended drought and reduced productivity.
“The larger trends around food prices and climate change show that we are vulnerable and that what is happening now is not providing us with security in our food supply,” said Brent Mansfield, coauthor of the Vancity report. “A robust local food system requires protecting agricultural land and ensuring it’s actively farmed.”
Prospective farmers in B.C. appear to be in competition with real estate developers and purchasers of estate homes for farmland. Farm parcels under 0.8 hectares (two acres) — those sites most suitable for monster homes — have experienced the greatest gains in value during the past 25 years.
About one-third of all actively farmed land in Metro Vancouver is owned by non-farmers and businesses and leased back to farmers.
Many of those businesses are companies that have the terms “holding, investment, estate, property, land or development” in their name, according to data from Metro Vancouver. This raises the possibility that farmland is being purchased and held on speculation for estate homes or development, said Mansfield.
Despite these challenges, farming on the region’s 60,000 hectares (150,000 acres) remains a significant economic engine, though only half of that is actively farmed.
“I have no problem with people buying beautiful and wanting that country life, but we need to understand what agricultural land is for,” said Mansfield. “We need to look at the tax regimes and make sure that land in the Agricultural Land Reserve does what it was intended to do.”
The farm income required to maintain farm tax status — and lower taxes — on an estate home is as little as $2,500 a year for property between 0.8 hectares (1.98 acres) and 4 hectares (10 acres). About half of the farms in Metro Vancouver report income under $10,000.
“Farmland in Metro Vancouver is justifiably more expensive than the north because of easy access to markets, but there is a balancing act,” said Mansfield. When the price of farmland rises above $200,000 per hectare ($80,000/ acre) farming may no longer be profitable, especially where farmers have to carry a mortgage, according to the report.
Small parcel farmland can sell for as much as $875,000 per hectare ($350,000/acre), or four times the price at which the financial viability of a farm — set by Farm Credit Canada — is exceeded.