Why Farmland Protection is Not Enough
Report Outlines Ways to Fully Use BC’s Agricultural Land Reserve
BC can expect to face a future of rising food prices and food shortages unless it protects and fully utilizes its Agricultural Land Reserve farmlands.
A new report from the Institute for Sustainable Food Systems at Kwantlen University, shows why simply reserving land for agriculture without comprehensive programs to expand and develop farming is not effective public policy. The report, Protection is Not Enough, looks at why so much of BC’s preserved farmland is underused, and presents ways to protect and revitalize the Agricultural Land Reserve (ALR).
Lack of Suitable Farmland and Dependence on Imported Food
Map of the Agricultural Land Reserve in Greater Vancouver.
Only five percent of BC’s land is suitable for agriculture. Of that, much of the best farmland is located in the urbanized Lower Mainland and on Vancouver Island. If that land is lost to urban sprawl, British Columbia will become almost entirely dependent on imported food. As the weather and the political climate shifts, food imports, mainly from California and Mexico, become less reliable—subject to droughts, tariffs and increasing transport costs.
Anticipating this danger, in 1973, the NDP government led by Dave Barrett, established the Agricultural Land Reserve to set aside the province’s small farmland resource for agriculture. Succeeding governments failed to provide programs and funding to develop a balanced and active agriculture on these preserved lands. Today, on average, only 50 percent of the ALR is used for agriculture.
Today, on average, only 50 percent of the Agricultural Land Reserve is used for agriculture.
Why the Agricultural Land Reserve is Not Always Used for Farming
The Institute for Sustainable Food Systems study discovered four major reasons why so much ALR land is underused.
Inflated Costs of Farmland
Farmland parcels smaller than five acres in the Metro Vancouver area sell for between $150,000 to $350,000 per acre. This far exceeds the price at which farming is viable. According to Farm Credit Canada, farming is no longer financially viable when land prices exceed $80,000 per acre.
Pressure for Non-Farming Uses
A mansion under construction on prime farmland in Richmond, BC.
Single family homes not connected to farming are currently permitted in the ALR. In the prime farmlands adjacent to Metro Vancouver, the number of ALR parcels used exclusively for residential purposes exceeds those used in agriculture. A great many of these ALR parcels are five and ten acres in size, so this permitted use allows agriculturally zoned land to become, in actuality, a rural residential “land reserve”. Removal of land from the ALR is also permitted for a variety of commercial and industrial uses.
Lax Farm Property Tax Rules
Property in the ALR confers a number of financial benefits on its owners, even when the land is not farmed. First, ALR property is assessed at a lower rate than similar urban lots. The rate is lower because there is an assumed reduction in value from owning agriculture land which carries restrictions against subdividing.
For example, a five-acre residential property in Langley’s urban boundary assessed at $4.2 million dollars might pay a property tax of approximately $13,000. Meanwhile, a five-acre residential property two kilometres away in Langley’s ALR would be assessed at $750,000 and pay a property tax of $3,800.
In addition, all residential properties in the ALR, including those not used in farming, receive a 50 percent school tax exemption. Further tax benefits are available for residential properties that qualify for farm class status by generating a modest $2,500 per year of farm income.
Speculation on Farmland
In recent years, non-farming residential and commercial use of ALR land, combined with ways to hide property ownership, encouraged massive speculation on ALR land. This has dramatically driven up land prices, inflating them out of reach for new farmers. A November 2016 article by the Globe and Mail found that 60 percent (73 of 122) purchased agricultural ALR properties were likely bought by speculators.
Two views of a mega-mansion on Agricultural Land Reserve farmland in Richmond, BC. Under current tax rules, a large estate like this on the ALR receives property tax benefits, even when the land is not farmed.
How to Protect Farmland and Increase Farming in the ALR
Given this situation, what can be done to increase farming in the Agricultural Land Reserve? The Institute for Sustainable Food System report outlines policies that could reduce price pressure on ALR land and encourage farming:
1. Restrict Foreign Farmland Ownership
Five Canadian provinces have laws that restrict foreign ownership of farmland: Alberta, Saskatchewan, Manitoba, Quebec, and Prince Edward Island. Prince Edward Island limits non-residents of the province to five acres. Saskatchewan restricts farmland ownership by non-Canadians to ten acres. The aim is to limit the pool of farmland available to wealthy multinational speculators.
2. Disclose Hidden Ownership of Farmland
British Columbia should require disclosure of beneficial owners as well as legal owners of property, and make the information available in an accessible public digital database.
At present, the actual beneficial owners of many ALR properties are hidden behind trusts or corporations that act as legal owners. The “legal owner” is the name that appears on the land title filed with the BC government. The “beneficial owner” is the person who makes decisions about the property and receives money from its rent or sale.
Existing BC and Canadian laws do not require legal entities that purchase land to disclose beneficial ownership. This has led to such abuses as the “bare trust” loophole, in which beneficial ownership is sold to a third party through a “bare trust” agreement while the legal ownership remains unchanged. In essence, the land changes hands with no public record. The bare trust loophole allows avoidance of property transfer taxes, foreign-buyers tax (if applicable), and federal capital gains taxes.
3. Reform Farm Property Tax Relief
Assess non-farming property in the ALR at the same rates as similar properties in adjacent urban areas. Stipulate that this reform may not be used as justification for removing land from the Agricultural Land Reserve.
Eliminate the 50 percent school tax exemption for residential (Class 1 prime farming soil) properties in the ALR. Raise the minimum farm classification income threshold (currently at $2,500 per year for 2 to 10 acres) to encourage market farming on the land, rather than minimal “farming” to receive tax benefits. Establish a multi-tier system to give greater benefits to farms that achieve higher farm income.
4. Strengthen Farmland Lease Regulations
Help farmers who cannot buy land. Improve lease regulations to encourage long-term tenancy and protect the rights of farmers who must lease land. This could include minimum lease terms and limits to land rent increases. In addition, lease-holding tenants could have the right of first purchase when land is sold. Low-interest long-term provincial loans could help provide access to capital for these farmers.
Transforming the Agricultural Land Reserve
These policy reforms will lessen development pressure on farmland and help restore the ALR’s protective role, but alone, they are not enough.
To launch a new generation of young farmers on the ALR, British Columbia also needs to provide substantial financial resources to overcome existing cost barriers. A new farmer start-up program might include provincial long-term low-interest loans, new demonstration and co-op farms, direct purchase of land for long-term lease-to-buy arrangements, and construction of a food processing facilities network.
If British Columbians are to enjoy food security in the 21st century, agriculture must take a front seat and become a major source of local economic development. With enhanced policy to protect ALR land for farming use, and with new farm start-up incentives, BC will not just preserve its valuable farmland, but also transform the ALR into a vibrant food production zone.
More articles:
Happy Birthday Agricultural Land Reserve
Can Local Agriculture Drive Economic Development?
Who Are the 21st Century Farmers?
Has BC made any progress on ALR reform? I agreed with this comment, “We need to support our farmers with tax cuts based on acres farmed, and higher taxes on farms that do not produce.
In the long run it will be a cost that will be effective.”
I can’t afford ALR farms currently listed. I bet half for sale can’t afford to farm either. Borrowing costs and labour shortages makes this a very difficult enterprise. Something needs to be done.
Codify legislation that allows development permits for “mega-mansions” on farm land to be rejected? Stipulate that secondary structures be actually used for farm related operations? That “mega mansions” has two additional structures that are clearly not being used for anything farm related…
Something missing from this missive: farmworker housing.
Currently, the de-facto restriction on ALR land is one primary residence of any size and one farmworker house of any size per parcel. Some municipalities allow “aggregated density” to allow increased habitation to that if the land were fully subdivided into 20 acre parcels; others do not, and a variance must be sought.
Municipalities are beginning to fight mansions on farmland by imposing building area limitations.
These two things combine to reduce farmer habitation on farmland. The “two houses per 20 acre” rule assumes levels of fossil-fuel-supported farming as found in the prairie provinces, but low-mechanization, high-labour organic and Permaculture techniques require up to one person per acre to achieve full agricultural potential. You can’t really put 20 people in two houses, and you don’t really want farmworkers commuting to farmland.
The answer is to allow greater density in farmland, but severely limit it to agricultural housing. The ALC’s stance has been that the ALCA already does that, but it obviously does not. Municipalities often use “dead time” regulations to enforce farmworker housing, such as requiring that it be empty for at least one month per year. This is counter-productive to building an ethic of farming, it increases transience and reduces the likelihood that (for example) long-lived perennial trees will be planted.
One way around this is co-housing: build a huge house with certain shared facilities, such as laundry, guest rooms, and even washrooms, but house-area restrictions and habitation-time restrictions are counter to that.
Another way to address some of these issues is co-ownership, using either a corporate or cooperative model. But such ownership often comes with hidden penalties, such as the inability to get mortgages at homeowner rates, and higher insurance costs.
We need to build a culture in which farm workers can have a close, long-term association with the land. Farmers and land are NOT interchangeable parts, like tech workers and cubicles are, and we will continue to have trouble feeding ourselves until we understand and encourage farmworker habitation on the farm site.
EcoReality Co-op is trying to build such a culture, but we could use some help!
We need to support our farmers with tax cuts based on acres farmed, and higher taxes on farms that do not produce.
In the long run it will be a cost that will be effective.