Canola Field aerial (Photo: Thinkstock)
American farmland titan eyes Canada
By Jennifer Blair
One of America’s largest farm management and real estate brokerages has expanded into the Canadian Prairies — starting with Alberta.
Through a joint partnership with Edmonton-based consulting firm Serecon, Farmers National Company is now “open for business” in Canada.
“It seemed like the right fit for the right timing going into the Canadian market,” said Dave Englund, board chair of the new entity, FNC Serecon. “We’re both excited about the business opportunities in Canada.”
Although virtually unknown north of the border, Farmers National is a huge player on the U.S. farm scene — managing 5,000 farms and more than two million acres in 30 states. FNC Serecon will offer farm management and real estate brokerage services in Alberta, Saskatchewan, and Manitoba, and intends to eventually expand to Ontario and B.C.
“Our main business is managing property for absentee landowners,” said Englund, an Omaha native who has worked for Farmers National for the past 28 years, most recently as senior vice-president of farm and ranch management.
“About 60 per cent of the land in the United States is owned by absentee or non-operating landowners… Most of what we have is people who have ties to land that has been passed down from generation to generation. Our average clients are the people who have inherited the ground from their parents or their grandparents.”
But most “don’t have the ties and the knowledge of the people and the wherewithal to have that ground farmed,” he added.
That’s where Farmers National comes in.
“They come to us, and we work with them to fulfil their goals and objectives on that farm,” said Englund, adding Farmers National “basically does everything except running the tractors.
“We make sure the farms are taken care of — that the crops are planted, taken care of, and harvested. We also work with them on the marketing of that crop, collect the income, disperse it through their trust accounts, and pay any bills that they might have.”
Five lease types
The company uses area farm managers to co-ordinate the day-to-day on-farm work with local farmers, based on “five basic lease types — a cash-rent lease, crop-share lease, a 50/50 lease, a custom farming lease, and a net share lease.”
The new company has hired one farm manager, based in Edmonton, and plans to expand as business grows. (The plan is to blend Serecon’s Canada-wide consulting services with Farmers National farm management service. The six-person management team is comprised of three officials from each company.)
“We go out and work with local farmers in that area and negotiate leases with them to farm that property,” said Englund. “We work strictly with the local farmers based on what our clients want for their lease types and their goals and objectives for their farms.”
Once the lease type has been decided, the farm manager acts as a liaison between the farm owner and the lessee to develop a plan to work the land.
“We create cropping plans for the farm with the operator and then draw up a budget for seed varieties, herbicides, and pesticides and plan the seeding rate, timing of planting, things like that. We then present that plan to the owner.”
Marketing is approached the same way.
“We determine with the farm owner what sales levels we want to do,” said Englund, adding they do “a lot of cash sales and forward contracting.”
“We’ll set out target levels where, once the price of grain gets to a certain level, we might want to sell 10 or 15 per cent of that projected harvest.”
The goal is to have most of the grain priced before harvest, said Englund.
“We’ll have 20 or 30 per cent left to sell after harvest, and then we work with our clients based on their income needs — whether they need to sell all their grain in the current year for tax reasons, or if they can carry over grain and market some this year and some next year,” he said.
“Once we get done with harvest, we’ll try to price grain on the rallies as we go into the spring months.”
Owner in charge
Ultimately though, the farm owner has the final say over any sales or management practices.
“The client is the owner of the farm, and we work for them,” he said. “We set up whatever we do so that it meets what the clients want done on their farms.”
The company also plans to be a major player in the Canadian agricultural real estate market. It handled $2.7 billion in U.S. farmland sales in the last five years, and there’s a lot more land about to change hands on both sides of the border, said Englund.
“We’re at the point where a lot of the landowners are at that 60- to 85-year (age) range, and that’s where most of the wealth is held normally. We’re going to see a huge wealth distribution going on from that generation to the next generation. There’s probably going to be about 50 to 60 per cent of the land market — both in the U.S. and Canada — changing hands between now and 2030.”
Real estate sales have slowed and prices have softened this year, but good-quality land is still selling well, he said.
For the time being, though, Englund said he will be focusing on getting to know Canada better.
“I’m going to be spending quite a bit of time up there, going pretty much all across Canada trying to grow our business. I’m looking forward to it.”