Vancity Report on Farm Land Prices in Metro Vancouver

Posted by Moss Dance on April 11, 2016

Vancity Farm Land Price Increase

“It is an understatement to say that farmland in Metro Vancouver is expensive and that these high prices are a significant challenge to developing a more resilient, self-reliant local food system.”

Vancity’s has recently released a report, “Home on the Range: Cost pressures and the price of farmland in Metro Vancouver” that outlines some of the key challenges for farm land and local food access in BC’s largest urban centre.

British Columbia is very susceptible to global food price increases because of dependence on food imports. In BC, 67% of vegetables and 44% of fruits are imported from the United States. Amongst these imports, half are imported from drought-stricken California, where production is going down and prices are going up.

From January 2016-January 206, fresh vegetable prices increased by 26.2% and fresh fruit prices went up by 9.0%. Higher increases are being predicted for the near future.

A logical solution to this issue is to produce more food at home. A food system that increases B.C.’s food self-reliance would decrease dependence on food imports and improve resilience against global food supply and price shocks. However, the high price of farmland in Metro Vancouver currently threatens the viability of such a system. Farmland prices in Metro Vancouver range from $150,000 to $350,000 per acre for parcels less than 5 acres, and from $50,000 to $80,000 per acre for parcels more than 40 acres. The financial viability of many farm businesses in B.C. becomes questionable when land prices reach $80,000 per acre.

To Own or To Lease?

New or established farmers who purchase land in Metro Vancouver at prevailing farm prices – and who carry a mortgage to do so – face production costs that would result in anywhere from 10 to 70% higher food prices if they were passed on to consumers. In the report, Vancity does a brief economic comparison between two carrot farmers – one on leased land and one on purchased land. The comparison shows that the annual operating costs of the farm run on purchased land are 1.5 times higher than the farm on leased land. Vancity repeated this study for a variety of other fresh vegetable crops including lettuce, cabbage, broccoli and potatoes.

Farm Land Vancity

So leasing land sounds like a better option, right?

Although leasing is more financially feasible than purchasing land, most farmers do not see it as a long-term business strategy. This is likely because leased land does not offer the same secure tenure. In a recent survey of prospective farmers, 100% of respondents indicated that their long-term goal is to own rather than lease farmland. The challenge that leasing presents to establishing sustainable farming businesses is that fewer capital investments and land stewardship practices are made on leased farmland. This is because of the short-term tenure of agreements as well as the risk of losing any financial investment in permanent buildings, irrigation or drainage infrastructure.

Who Owns the Farm Land?

Almost one-third of Metro Vancouver’s actively farmed land in the Agricultural Land Reserve (ALR) is accessed by farmers through leases from non-farmer landowners. Of the total leased farmland in Metro Vancouver, 35% is owned by businesses, many of which are “holding companies.” The significant non-farmer ownership of leased agricultural land raises concerns that land is potentially being purchased on speculation for future estate homes or development.

About That Farm Land Price Tag…

Farmland prices should reflect the capacity of the land to support a financially profitable agricultural business. This is not currently the case in Metro Vancouver. Rising cost of residential property has a spill over effect on farm land, especially parcels under 10 acres. Other factors such as proximity to urban centres, cost of residential land in those centres and property tax advantages all play a part in this equation.

Prospective farmers who wish to purchase land are in competition for prime agricultural land with developers and purchasers of estate homes (larger than average residences on agricultural land) seeking to avoid the high cost of residential land by purchasing less expensive rural land.

Speculation is also an issue – as land costs soar, some owners may be waiting for the value of their property to increase for resale. Currently, only a small number of landowner applications for removal of farmland from the ALR are successful, but the hope of success may still encourage speculation and be a factor affecting the price of larger parcels of farmland.

ALR land uses

Recommendations

To develop a robust local food system, Vancity recommends strong policy solutions to address the high price of farmland, to increase the amount of actively farmed land and to discourage the non-farm use of ALR land.

Vancity’s recommendations include: bold measures to ensure that ALR land is actively farmed; working with municipalities and regions to develop policies that discourage estate development on farm land; taxation as a tool to ensure farm activity; register leases on title to provide more secure tenure for farmers; moderate the price of ALR land; invest in business and skills-based education for farmers, and; continue to fund and strengthen the Agricultural Land Commission.

Read the Report!

Please take a moment to read through Vancity’s full report on Farm Land Prices in Metro Vancouver – it’s full of info that might just help you decide your farming future!

Read the full Vancity Farm Land Prices report here.

Find out more about Vancity’s investment in local & organic food.

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