Lobbying is underway for government programs to help farmers especially young farmers cope with the exploding costs of farmland. As just one example, Ottawa is being told it should open up new tax-sheltered trust accounts that would let existing farmers contribute funds that young farmers would then draw on for mortgages, with additional interest rate relief or other assistance from taxpayers.
At the very least, let s ensure that any such programs are matched by even bolder support for new business models.
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The challenges faced by young farmers are all too real. No one can doubt this. We need to recognize though that land prices are nowhere near plateauing. Today s pressures may soon seem enviable.
Of course, too, there s a danger that a farmer-funded mortgage program will encourage more young farmers to bid more aggressively for land, and that this may exacerbate agriculture s problems by driving up land and rental costs for everyone, making it more difficult for mid-career farmers to expand and maintain internationally competitive economies of scale.
Probably, those risks are modest. Worse though is the risk that such a program would stymie the essential business evolution of Canadian agriculture.
Many families have chosen incorporation as a business model that lets them manage and then transfer assets including land while respecting the different needs of the different generations. Incorporation isn t always the right answer, but clearly we shouldn t be undermining it.
Other strategies too, such as the joint ventures you have read about in past issues of Country Guide, and which you will read more about in an Anne Lazurko story in this issue, have a potential to create business solutions for expensive land.
There is the serious question too about whether farming has to involve land ownership. All of us have heard over the years that farming is about producing crops and livestock, not about speculating in land. We have dismissed such ideas as dreaming. How can you finance a farm without land equity, we ask, and how could you tolerate the ups and downs of farm net incomes without the expectation of funding your retirement by selling land?
The truth is, more farmers across the country are beginning to do just that. You ll meet some of them in coming issues of Country Guide. Will they succeed? Time will tell, but I wouldn t want to bet against them.
Let government do what government does reasonably well. Let it support risk management. By all means, let s insist that it also get back into supporting agronomic research.
Now, let it also help overcome the obstacles to business innovation. The past was grand, but it s a closed door.
What do you think? Give me a call at 519-674-1449, or email me at tom. [email protected]. Are we getting it right?
