Managing agricultural land capital in Canada

Canada’s agriculture and agri-food sector is much like a business. Its success is based on the assets it has. That includes the people who work in the sector, the capital that is deployed in it and the land that it operates in. And just like a business, the assets we have and the shape they are in influence the opportunities and success we have.?

We know that Canadian agriculture and agri-food has a human resources challenge. The Canadian Agricultural Human Resources Council Industry Dashboard reveals that there were almost 29,000 unfilled vacancies in 2022, leading to approximately $3.5 billion in lost sales.?

There is significant capital available in the sector but there is also increasing recognition that it’s not enough for the sector to achieve its potential. According to Statistics Canada, equity in agriculture increased by more than 40% between 2019 and 2023, reaching almost $785M.??

However, access to capital continues to be a challenge. The House of Commons agriculture committee has raised the issue during its work on young farmers, farm financial viability, food processing and Indigenous agriculture. There is more that could be done if more capital was available.?

While people know the impacts of limitations of human and financial capital in the sector, there is a need to talk more about the land capital that is available to the sector.?

First, there needs to be more recognition that, while Canada is a big country, much of it is not good for farming. Just over 6% of Canada’s land mass is used for agriculture, and the number of acres farmed is falling.??

In 1961, the Census of Agriculture (CoA) reported the total area of farms as 172 million acres. In 2021 that dropped down to 153 million. In fact, in 2021, the CoA reported the lowest total area of farms since 1921.?

While land may seem like a limited physical resource, there should be room to grow, and that growth could be good for agriculture and the country.?

Primary agriculture generated under $28B in GDP in 2021. Had Canadian farmers been generating the same economic contribution per acre but farming the land they did 50 years ago, the economic contribution would have been more than 13% higher, or an additional $3.7B higher.??

But can —?and should —?we aim to farm what we were farming before??

First, it’s important to acknowledge some of the land is no longer available, with some of it being lost to urban expansion. The way the government tracks urban land has shifted, but between 1971 and 2011, the built-up area expanded by almost 2.2M acres and another 116,000 acres were added between 2010 and 2020.?

A significant share of the lost land is considered prime farmland.?

However, some of the land is just no longer being farmed.??

In Ontario, the government reports on land that is taxed as agricultural (land that has been used for ag production at one point) and land being reported as currently used for agriculture in the CoA. The data shows some significant differences, with 5M more acres assessed as farmland than reported as farmed in the CoA.?

In addition to the land that was farmed before but not farmed today, there is the potential additional acres that may be made suitable for production because of the changing climate. One study predicted the potential for significant expansion, almost doubling, in the land suitable for agriculture over the longer term. Recognizing the uncertainty of the impact of climate change on existing lands, it does appear that there will be increasing potential to bring more land into production.??

The data and evidence point to the potential to bring more land into production, but it does not answer the question of whether we should. Some of the land that was farmed previously is marginal or ecologically sensitive land. It may not be economical or environmentally desirable to bring it back into production. There could be additional negative consequences with the land made available by climate change.?The reality is that some of the land being farmed today is likely also marginal or sensitive land and maybe should be taken out of production.??

The sector's challenge is that there is no meaningful plan or framework to plan for this future. Land use is a provincial issue that the federal government seems to want to avoid talking about. Farmers face competing economic pressures to use the land for the highest possible returns and societal pressures to protect it for environmental reasons, including potentially taking it out of production.?

For all the talk about managing our human and financial capital limitations, there should be more discussion about managing our land capital limitations as well. CAPI aims to increase that dialogue through its Policies for Land Use Agriculture and Nature initiative. You can find resources on the PLAN hub and stay tuned for more. Land is one of our greatest assets - we need to talk more about how we use it.?