Farmland is a finite resource on this planet and as far back as the 1800s it was in such limited supply in Europe families recognized they could not chop small holdings into enough pieces to give large families a future. The result was an exodus to the promise of North America.
Today we again see an influx of European farmers who have realized they can sell small acreage farms in countries such as Britain, and come to Western Canada and turn the returns from the sale into much larger land holdings here.
While there is some potential for the world to expand arable acres moving forward it will be limited. New varietal work may allow crop production on higher saline soils, and more forest, primarily on Â鶹ÊÓƵ America may be cleared to farm, such processes are not going to be made without resistance.
As an example there are already efforts to maintain the rainforest for its importance in maintaining atmospheric health, and the hope the plant and animal species there may hold in terms of medicines.
And there are pressures taking land out of production too. Over farming, desertification, and urban sprawl all gobble up land.
All the elements suggests farmland is a resource which is critical to a world with a growing population, and that today the resource is quite likely under-valued, at least in Western Canada. The noted farm publication, The Western Producer has a good special section on soils that details much about the resource.
But the key element moving forward ultimately comes down to dollars and cents.
Long term it is a sure bet land will gain value, but does that necessarily mean greater prosperity for farmers?
We saw land skyrocket in value in the late 1970s, and the asset valuation of farms jumped. It was something which gave farmers the assets to borrow more money, which many did. Then interest rates climbed into the 20 per cent range, and land values slumped. Farmers were caught with huge payments, lower asset values, and the combination led to a flood of foreclosures which had a wave of farmgate protests by farmers as neighbours were chased off the farm by creditors.
Rising land values at that time were not generally positive for the farm sector.
Given the high level of debt many farmers carry today, and increase in land values might well only exasperate the problem.
There are those who do suggest if land was valued higher the debt load would naturally reduce as a percentage of farm assets.
To achieve a truer value based on supply / demand economics, there are suggesting foreign land ownership is a must. The ability for foreign corporations and individuals to own land strictly as an investment would increase values.
At the same time it would also create a new generation of tenant farmers, another influence which had people leaving Europe for here in the first place. That sounds bad, although in reality thousands of acres of farmland in Western Canada has in reality been owned by one financial institution, or another since the time it was first introduced to a plow.
And then there is the related issue of stewardship. Moving forward there will be increased regulation regarding farm practices, from herbicide and fertilizer use, to when and if straw can be burned, to the very methods used. While a farmer may hold title to a valuable resource, public pressure will mean government regulation to exactly how the land is used.
The land is both finite and critical, and such will be increasingly seen as a world people's resource, regardless of the name on the deed.
So, what does this all ultimately mean?
Bet on increased land prices, more government control, and the likelihood farmers will still struggle to make the farm pay.
