New farmer programs

Introduction

Jurisdictional issues

Provincial programs

NGO programs

Solutions

Efficiency

Substitution

Redesign

Financing the transition

Introduction

As part of Canada's labour force problem, we face a potential crisis over who the next farmers will be.  Although estimates vary, somewhere between 40 and 80% of farm assets, estimated value $245 billion (FMC), are scheduled to change hands in the next 10-15 years and it is unclear which hands will receive the farms.  With the average age of a farmer at 55, and fewer family members of existing farmers interested in farming, there is a need to bring into agriculture people without a recent family history of farming, including both young people getting started and second careerists, and recent immigrants who farmed in their homeland, both categories of which are unlikely to have substantial farm assets.  There are likely comparable problems in many food related businesses since SME succession is a recognized challenge of the wider economy (cf. Guillotte et al., 2021).

The signs of this looming problem have been apparent for some time. According to census data, from 1991 to 2021, average age increased from 47.5 to 56, and farmers under 35 fell by over 50,000 to  24,120 over that 30 year period, about 9% of all farmers and twice the rate of decline of the general farmer population (se also Laforge et al., 2018; Qualman et al., 2018). The 2021 Census of Agriculture shows that 2/3 of farms have no succession plan. More acutely problematic is that approximately 85% of retiring farmers  do not have a successor (FarmStart, 2016; Laforge et al., 2018). Interestingly, the supply managed commodities were 1,5 - 2 times more likely than the national average to have a transition plan (Statistics Canada, 2017) The lack of farm plans is particularly weak amongst sole proprietorships.  Much of current programming is premised on the older idea that family members will take over the farm, but the evidence suggests relying on family members is not a viable strategy on a national basis, and there are numerous reports of many farmers not wanting their children to take over because of the difficulties of farming. Only recently have decision makers become alarmed about the situation.

Now departments of agriculture and many financial institutions are pushing succession (or transition) planning, and there are regularly stories in the farm papers about families who created succession plans, stories that outline the struggles of family communication, a long standing issue in farm families. Succession planning guides are available in most if not all provinces.  However, the focus is largely on within family succession, or retirement planning in which the farm business is wound down. There is less focus on succession planning involving the transfer of the farm to non-family members.  It is clear from these guides that the property rights of the owners are the paramount consideration, followed by the interests of other family members, usually in an inheritance context. In most of the guides, there is limited to no acknowledgement of the wider role farms play in feeding society. In some surveys, only half of farmers state it is very important or essential that the farm continue regardless of ownership (Family Farm Succession, 2019).  With such attitudes, it is easier to see a farm disappearing without a successor, and this is on one level understandable when governments do not support farming adequately given its critical role in society (discussed in many other areas of this site, particularly Goal 5, Sustainable Food).

Low farm incomes, rising land values, farm scale increases and consolidation, and rising (some feel to a crisis level because it has tripled since the early 1990s) farm debt also complicate farm renewal (see Qualman et al., 2018) because it becomes more challenging to finance both retirements of leaving farmers, deal with inheritance issues across all the children,  and assure affordable acquisition for incoming ones. Reliance on off-farm income continues to increase, with Statistics Canada reporting in January 2022 that almost 2/3 of family farm income came from off-farm sources. New farmers, in particular, have difficulty acquiring financing without pre-existing assets and a farming track record.

There are also, however, numerous psycho-social considerations related to the factors presented above regarding the lack of interest in farm succession from family members, including family traditions (e.g., was farm succession inherently part of the early childhood of family members), motivations, beliefs about government supports, perceived degree of control in succession and feelings about the general state of farming (May et al., 2019). Because of all these realities, there are new models of farm transfer being implemented on small and experimental scales, and these are discussed further in Solutions.

New farmers from non-farm backgrounds are much more likely to be interested in ecological production, small scale vegetables and other niche products, direct marketing. Many new immigrants with farm backgrounds come from smaller enterprises than are typical in Canada. All this, in combination with the expense of getting into large scale production, explains this interest. Significantly more women are new farmers than the national farmer profile (Laforge et al., 2018; see also Shumsky and Nelson 2018 on the increasing numbers of women and young farmers).

So, all this raises an important question of scale.  Given that there aren't enough farm family members, or experienced farmers of other farm families, or immigrants with experience of Canadian scale to take over large operations, and the costs of acquiring a large farm by those without traditional farm assets are extremely difficult to finance, what will happen to these large operations?  The weak to modest structure of supports in some provinces, and the farming desires of new farmers without a farm background, do not for the most part align with large conventional operations. Some retiring farmers without options, and located in desirable peri-urban areas, will sell out to developers.  Some farms may be acquired by investment groups, but will require experienced farm managers to operate the business, also likely in short supply. There are already stories of farmers hanging on into their 70s and 80s, hoping for a successor to emerge. There are small programs designed to attract experienced farmers from Europe, a throwback strategy to an earlier time of European settlement. Some farms will be divvied up, their assets sold and their land rented out to neighbours or possibly severed to accommodate different family members.  All of this is highly problematic, but on some level inevitable given the lack of a comprehensive strategy.

Supports for new farmers will likely be a boost for small to medium enterprises, those focusing more on direct marketing and "alternative" distribution channels, food service and ecological production. All that is important as we build a more resilient food system in Canada based on scale, market and demographic diversity.  But given the current level of these so-called alternative sectors, their growth will not compensate for overall declines associated with the loss of larger operations, unless some of the other initiatives on this site are implemented concurrently, particularly related to Demand-supply Coordination (see Goal 2).

The most comprehensive  renewal plan to date for new farmers was developed by FarmStart (2016), in collaboration with the National Farmer's Union and Food Secure Canada. This plan focused primarily on the small to medium farm sector, and did not address the wider dynamics discussed above.  Many of their proposals are integrated here and also in other parts of the site (cf. Goal 5 Agricultural Land Protection, and Goal 3 Reducing Corporate Concentration).

Jurisdictional issues

Given the shared authority for agriculture (see Instruments, Constitutional Provisions), the federal Farm Credit Corporation, established in 1959 as a replacement for the Canadian Farm Loan Board, provides financing to farmers under a variety of programs, including some purported to target the next generation.  Reflecting the shared jurisdiction, the Canadian Agricultural Partnerships (Agricultural Policy Framework) also has some cost-shared programming that addresses farm succession and renewal issues (see also Table).  There are also some wider angle tax policy matters that involve the Canada Revenue Agency. But farm succession is primarily provincial / territorial jurisdiction since it is about agriculture, land use, business ownership and licensing, business and agronomic professional advisory services, and training. Some regional and rural municipalities are very affected by farm succession issues because of what it means for their land base and property and educational taxes and some may contribute to NGO and provincial programming as a result, but they do not have specific jurisdiction in this area.

Provincial programs

The provinces and territories are generally much more engaged in traditional farm succession issues than in programming for new farmers from non-farm backgrounds. An implicit presumption of that programming is that succession farmers will appear (i.e., return to the farm from other careers) with very modest supports, something that is not born out by the data, with the possible exception of Quebec where there are long standing supports for farm succession (much of it linked to the organization, La Relève).

Modest farm succession planning information and supports are available in each province, often with provision of lists of recognized advisors, for example, through the Canadian Association of Farm Advisors. A basic premise of most of this provincial information is that these are matters of the family, with privately funded advice from those with tax and estate planning expertise. These advisors present a range of viable strategies to make within family transition work, with success often dependent on the clarity of the family conversation. The suite of Business Risk Management programs under the CAP may also be helpful to those with family backgrounds in farming, much less so for new entrants without farm assets. Some of these are discussed under Goal 6. So, the challenge here is not a lack of strategies for within family transition (at least if the farm can pay for the advice), the problem is not having enough family members who want to take over farms, particularly large ones. Provinces do not have coherent strategies, with the possible exception of Quebec, for transition of large operations to either family or non-family members.

Most provinces also have training and advisory programs that new farmers can take advantage of, but are typically somewhat generic, in other words, not necessarily specific to the realities of new farmers without farm assets. However, in many provinces, programs that were more supportive of new entrants have been scaled back or eliminated relative to Growing Forward 2 (which ended in 2018). There are multiple challenges here: not attracting enough new entrants, and not properly addressing the multiple barriers they face to becoming farmers, especially for larger operations.  There are numerous anecdotal stories of established farmers creating innovative transition plans (with support from advisors) to non-family members, usually more in Eastern than Western Canada where farm sizes are often more manageable for transition (cf. Van Camp, 2016; Hein, 2019), but these experiences are not being codified in program designs by governments.  The government view appears to be that the market will take care of such possibilities, or that NGOs will facilitate linkages (see below) and to some extent that approach has been codified in government contributions to NGO activity.

Table: New farmer financial and land access programs (adapted from Wilson and Martorell, 2017)

Jurisdiction Programs Comments Missing
Canada FCC Starter and Young Farmer and Transition Loan Programs

CAP programs discussed under provinces

Limited understanding of farmers with no farm assets; focus on traditional agricultural actors; who qualifies based on traditional understanding of farm transfer Focus on low-input farming
BC B.C. Agri-Business Planning Program (CAP) Offers $3000 for a business planning advisor Doesn't appear helpful for start up phase, focus on adapting existing business plan
AB Does not appear to have any programs
SK Ag Skills and Knowledge Program (CAP) Cost-share funds succession planning courses Nothing for new startups, have to be an existing farmer
MB Bridging Generations Initiative (CAP), Young Farmer Rebate on loan; Flexible Financing Financing more viable for start up, can help with downpayment Must already be operating a farm for rebate
ON Evaluate your business potential (CAP) Support for business planning, but not succession planning In theory includes start ups, but restrictions likely mean few new farmers would apply
QC FIRA; Banque de terres (L'ARterre) - land matching; FADQ startup subsidies Many options for affordable acquisition of land for new entrants; land matching program includes new entrants; training and establishment subsidies Better regulation of rented land, rates and speculative land activity; tighter links between programs
NB Agricultural Loan and Loan Guarantees Gov't asks as a complementary lender to private loans New farmers have to already operate farms, no eligibility for startups, have to have equity in project
PE Future Farmer Program (CAP) Cost share funds business advisors, skills development, some on-farm projects, some BRM participation New farmers are eligible but must already have a business or succession plan and a farm; funding can't be used for land or buildings
NL Crown land long term lease program 25-50 years, low rates
NS ThinkFarm (CAP);

FarmNext

Focus on beginning farmers, may be cost-share funding support; FarmNext maximum $30,000 Support pretty limited given the challenges of starting a farm without farm assets; FarmNext requires a farm business registration, focus more on succession or someone with farm experience (renting); limited funding
YU A number of programs through CAP to expand farming, but not specific to new farmers
NWT Northern Food Development Program;

A number of programs through CAP to expand farming

Focus on expanding existing operations, though startups are eligible in theory Startups may not be able to demonstrate sufficient experience and assets to qualify for NFDP, but other CAP programs may be more viable for new entrants
NU A number of programs through CAP to expand farming, but not necessarily specific to new farmers

 

It's clear that Quebec has the most advanced programming, and from the Census of Agriculture the most positive indicators of successful succession. The province has the highest percentage of young farmers, and the most farms with an identified successor. About 17% of farms have a written succession plan, about double the national average. And about half of those have a farmer under 40 as successor. The percentage of succession farmers starting new enterprises continues to slowly grow relative to those who take over the family farm, and Quebec appears to have the highest percentage of new farmers without farm backgrounds (Relève non apparentée) (Grossenbacher, 2015).  Family succession is particularly strong in dairy, but new startups more limited (for more see MAPAQ, 2017). The overall farm population has been dropping more slowly in Quebec than the national average, according to Census of Agriculture data. La Relève, dedicated to the issues of the next generation of farmers, has existed since 1982 and is intimately linked to l'Union des producteurs agricoles, consequently the best resourced organization with such a mission in Canada.  Although many other regional farm organizations have young farmer committees or entities, none are equivalent to La Relève.

FIRA (fonds d’investissement pour la relève agricole) is a $75 million fund with contributions from 2 pension funds (Desjardins and Fonds de solidarite FTQ) and the government of Quebec, that aims to support young entrepreneurs in agriculture. Note that federal funding through the CAP does not appear to be directly part of this program. Investments are made in the form of subordinated loans or by purchasing and leasing farmland in a lease to own arrangement with up to 15 year buyback to young farmers (under 39). L'ARterre is a land matching programme, the only one in the country with significant provincial support. It offers land-linking services to connect land owners with aspiring farmers and helps develop rental or purchase agreements.

NGO programs

Representing a common pattern in the Canadian food system, NGOs have attempted to fill voids in government programming. Much current training and business planning for those without farm assets is offered by NGOs, including Everdale in Ontario (see Laforge and Levkoe, 2018), and Farm Management Canada offers many programs nationally, though not necessarily targeted to new entrants.  Many combine training, planning and land link programs, including Young Agrarians in BC, Farms at Work in Ontario, and Farmlink nationally. Others are providing networking and advocacy including the National New Farmer Coalition and Food Secure Canada (FSC). Some receive periodic grants from government to support activities, but rely on multiple and somewhat unreliable funding streams to operate.

Financing the transition

The total costs of facilitating a rapid transition are unknown at this point.  There are programmatic costs related to advising, training and facilitating transfers.  There are financing costs associated with low cost financing of succession (relative to market rates).  However, the long term costs of failing to act are also exceptionally high, since the long-term destabilization of farming, farm abandonment and / or consolidation that would result would have far-reaching landscape, supply chain, community and health implications.  Canada would also likely become more dependent on certain imported foods than we already are which could potentially have national food security implications. All these potential costs are at this point unquantifiable.