Tag Archives: farms
Good Farms ‘Being Snapped Up Like Crazy’
By Debora Van Brenk , The London Free Press Wednesday, September 11, 2013 Soybeans grow in Leamington, Ontario on Wednesday, September 11, 2013. (DEREK RUTTAN, QMI Agency) A three-year frenzy for farmland is starting to cool — but only slightly — as grain prices continue sliding from last year’s lofty heights. Even so, don’t expect land prices to drop anytime soon, says a new national real estate report. It shows acreage has been a particularly hot seller in Southwestern Ontario, where it’s not unusual to find acreage selling at twice the price of a few years ago. “Farming has been on an enormous high,” said David Brown, executive vice-president of Re/Max that produced the farm market trends report. About 40% of acreage on the market saw multiple purchase offers and there continue to be a lot more interested buyers than sellers, he said. “The very desirable farms are being snapped up like crazy.” The biggest jump came last year, coinciding with corn prices that topped $7 a bushel and soybeans at $13-plus. But this year’s dip in crop prices is making some buyers more cautious. “That may moderate the market,” Brown predicted. He said that means prices will stabilize but are unlikely to fall. “It’s hard to forecast anything but positive,” he said, as long-term trends show there’s still far more demand for land than available acreage. The biggest price jumps in Ontario during the past three years took place in parts of Middlesex and Elgin counties. “Clearly the lustre came off in February” as crop prices started dropping, said Mark Wales, head of the Ontario Federation of Agriculture. But, apart from a decline in the 1980s when interest rates rose to 20%, land prices haven’t fallen in recent memory. Increases may slow, and sometimes even plateau, but the supply of land keeps shrinking and the world population is growing. “The long-term trend has always been upward,” Wales said. But the ups and down of commodity prices also mean anyone who has bought that rapidly appreciating land will also need some fiscal depth to make payments. “Hopefully for them, they have enough cash flow to back it up,” Wales said. The increase in purchase prices is also driving up rates to rent the land, he said. Brown said most buyers are neighbours of the sellers — far more often family farmers looking for economies of scale than speculators looking for a future flip. “They’re looking long term. They’re not interested in short-term fluctuations.” The rapid rise in prices also makes it tough to be a new buyer. “It’s good if you own it because it means you’re worth more, at least on paper,” Wales said. “The problem that such a massive short-term increase brings is that it makes it tough for young farmers.” Fifteen of the 17 rural communities highlighted in the RE/MAX farm report showed land-price increases in farmer-to-farmer sales — the Annapolis Valley in Nova Scotia and the Fraser Valley in British Columbia were the two exceptions where prices changed only slightly or not at all. — — — A sampling of farmland prices per acre (market value in 2010 in brackets) Leamington $11,000+ ($7,000) Chatham-Kent $5,000-$16,000 ($4,000 – $12,000) Middlesex East $12,000 ($8,000) Middlesex West $12,000 ($5,000) Elgin County East $10,000 ($6,000) Elgin County West $8,000 ($4,500) Lambton North $11,000 ($6,000) Lambton South $7,500 ($4,000) Woodstock/Stratford $15,000 – $18,000 ($8,400 – $8,600) Kitchener-Waterloo $15,000-$18,000 ($9,000 – $9,500) Bruce County $5,000 – $9,000 ($3,000 – $5,000) Grey County $3,500 – $6,500 ($2,500 – $3,000) Northern Saskatchewan n $1,500 – $2,000 ($650 – $1,200 in 2011) Central Alberta $3,400 – $6,500 ($1,600 – $3,800 in 2011) Fraser Valley $40,000 – $60,000 $40,000 – $60,000 in 2011) Source: RE/MAX Market Trends Report: Farm Edition 2013 Continue reading
Farms Are Gigantic Now. Even The “Family-Owned” Ones
By Lydia DePillis , Published: August 11 at 8:45 pm Picture your idea of a “family farm.” American Gothic ? Little House on the Prairie ? Maybe an idyllic 19th century life of cute cows and mowing hay? Yeah, everybody knows those don’t exist anymore, swept away by the forces of globalization and massive industrialized agribusiness. In one way that’s completely true–and in two other ways, it’s completely false, according to a new report out from the U.S. Department of Agriculture’s Economic Research Service. Let’s take the true part. Farms have gotten bigger, on average, when measured by the average number of acres under cultivation. The increase has been driven by several factors, including the development of high-tech equipment, seeds, and pesticides that made farming less labor intensive, increasing the returns to scale. Also, the rise of contracts means that farmers could lock in prices for their crops ahead of the harvest, allowing them to invest in that new technology (which may also have been accelerated by farm subsidies and the early-1990s disappearance of quotas that limited production). Farming got much more specialized, focusing on tremendous production of one commodity, rather than growing all kinds of veggies and livestock: But here’s the first untrue thing: Even while the average size of farms is going up, there are more small farms than ever, especially in small states with farmland preservation programs like Massachusetts and Rhode Island. Community-supported agriculture, plus the local and organic food movement, are starting to show up in the numbers. It’s the mid-sized farm, between 100 and 500 acres, that’s disappearing. And here’s the second thing that’s wrong about our understanding of the disappearance of family farms: 96.4 percent of the crop-producing farms in the U.S. are owned by families, and they represent 87 percent of all the agricultural value generated (non-family owned farms are defined as “those operated by cooperatives, by hired managers on behalf of non-operator owners, by large corporations with diverse ownership, and by small groups of unrelated people”). That hasn’t changed since about 1996. Part of the reason is that some mega-corporations have moved from direct ownership of cropland into a coordinating role, sourcing product from family-owned pieces of land that they’ve sold off. Also, families are just as capable of operating modern agricultural technology as agribusinesses are, as Chrystia Freeland described last year in the Atlantic. And finally, deep understanding of an area’s soil conditions and weather patterns– not to mention the local political landscape –are still valuable to productivity, which advantages families that pass such knowledge on through generations. That may not be the case forever. Ever-increasing size and specialization means that farms become riskier enterprises, able to be wiped out by a commodity price dip or unpredictable pathogen, which large corporations are better quipped to handle. And overseas, in places like Russia and Brazil, giant farms are developing monitoring techniques that could eventually make that local knowledge totally obsolete. In the mean time, though, just remember that when you say “family farm,” you might actually mean “small and relatively diversified farm,” though advocates for such operations might try to get you to think otherwise. Continue reading
Farms And Estates Need To Look At Implications Of HMRC Partnership Tax Clamp Down
17 June 2013 by Andrew Shirley Chatting to accountants Roythornes and Chaverys at last week’s Cereals event, the next looming tax issue for farms and estates seems to be the use of partnerships. As mentioned in my Budget blog, Chancellor George Osborne threatened a closer look at partnerships earlier this year. Typically, this was the kind of promise you knew he’d keep and HMRC has just released a consultation document inviting comments on its proposals, which it plans to introduce on 6 April 2014. Although HMRC says its changes will not impact on the use of partnerships for genuine business reasons, not everybody will have the same view on what constitutes a genuine business reason. While farming partnerships may not attract quite as much scrutiny as the likes of Google, it is probably worth any businesses involving a partnership, particularly where one or more of the partners is a company or trust, taking professional advice on the potential impact of the planned changes. The two areas the consultation looks at are: Disguised employment: an LLP member who works for the LLP on terms that are tantamount to employment. Profit and loss allocation schemes: members of LLPs and other partnerships where the members of the partnership consist of members who are chargeable to income tax and others who are not, but only where it is reasonable to assume that: • A main purpose of the partnership profit-sharing arrangements is to secure an income tax advantage for any person; or • A main purpose of arrangements in force is to allocate a partnership loss to a partner with a view to that partner obtaining a reduction in tax liability by way of income tax reliefs or capital gains relief. Profit and loss allocation schemes also cover tax-motivated arrangements whereby one partner transfers profits to another as a result of a revised allocation of profits in return for payment that is not taxed as income. Those wishing to respond to the consultation document have until 9 August 2013 to do so. Read the full HMRC consultation Continue reading
