The Province | April 30, 2014
Foreigners can buy as much B.C. farmland as they want — and they are
By Glenda Luymes
In waterlogged B.C., particularly in spring, international headlines about drought and food shortages seem far-fetched and far away.
But to real estate appraiser Rudy Nielsen, a man who makes his living looking at the big picture, the threats seem very real and potentially very profitable — if B.C. can recognize what it has before it’s too late.
“We need to keep a better handle on who owns our farmland and who owns our water,” Nielsen said.
British Columbia is the only western province that has no restrictions on the foreign ownership of farmland. In fact, B.C. doesn’t even track foreign owners.
In Alberta, non-residents and foreign-controlled companies can own up to 20 acres of farmland. In Manitoba it’s 40 acres, and in Saskatchewan 10 acres (although entities that are partly foreign-owned but controlled by local residents can own up to 320 acres).
With the president of the World Bank predicting “fights over water and food” within the next five to 10 years, and a recent Chinese government study showing that nearly a fifth of China’s soil is contaminated, Nielsen believes B.C.’s food-producing land will become increasingly sought after.
The protection of B.C. farmland is also a chief concern of the B.C. Agriculture Council, although they have “no official position” on foreign ownership, said vice-chair Garnet Etsell.
But the “blip on the radar” is growing, and Etsell believes the issue is likely to become more significant in the future.
“You’ve got people coming from China and India who view land here as a bargain,” he said. “In the face of food shortages, we’re the envy of the world.”
When Landcor, Nielsen’s company, began appraising ranches in the 1980s, the calculations were simple and based on the number of cows and calves the land could support, he said. In recent years, water rights have begun to play a larger role.
At Tophay Agri-Industries in Vanderhoof, the international push for greater food security has meant a booming business exporting B.C. hay for cattle in China and the Middle East. The bales are compressed and shipped by rail to Prince Rupert and then go by boat overseas.
Tophay administrator Scott Muller said the company can’t keep up with demand. He said it receives two or three calls each week from prospective clients.
“We have an abundance of water in B.C., and with that, the ability to grow grass,” Muller explained. “What these countries are really buying is our water, converted to hay.”
Though many believe the price of local farmland will eventually be driven by international demand for food, there’s little evidence it’s happening right now.
Jean-Pierre Gervais, chief agricultural economist for Farm Credit Canada, said that while farmland purchases by “non-traditional” groups, such as foreign companies and investment or pension funds, tend to attract attention, the bulk of farmland sales still occur between farmers.
FCC released its annual farmland values report two weeks ago, showing the average price of B.C. farmland rose by three per cent in 2013 following two years of insignificant gains.
Compared to Saskatchewan, where prices jumped 28.5 per cent in 2013, B.C. is experiencing a “cooling off” after double-digit increases in the five years preceding 2008, said Gervais, who views B.C. as the canary in the mine shaft, with price fluctuations happening here several years ahead of the rest of the country.
FCC senior appraiser Bill Wiebe, who is based in Abbotsford, sees “the odd occasion” where development potential influences the price of Fraser Valley farmland, but most often he sees the same trend as Gervais.
“By far, the bulk of farmland is bought by farmers,” he said.
That’s little comfort to Andrew Arkesteyn-Vogler, an organic farmer who doesn’t come from a big farm family.
Once a week for the last four years, the Abbotsford man has browsed B.C. real estate listings looking for affordable farmland. In the process, he has learned the language of land speculation.
“The listing will say, ‘Great holding property’ or ‘Near this or that subdivision,’” said Arkesteyn-Vogler. “What they really mean is, ‘This land will be worth a lot if you can get it out of the ALR (Agricultural Land Reserve).’”
Arkesteyn-Vogler began his organic farm, Crisp Organics, in 2010. He owns 11 acres and leases another six. But with demand for his produce outpacing supply, he has started looking at land in the Interior.
“We’re in Zone 1 now, but we’re thinking about Zone 2 for the future,” he said, referring to proposed changes to the ALR that would divide B.C. farmland into two zones. “It’s significantly cheaper.”
Arkesteyn-Vogler is also hoping the provincial government will send speculators a “clear signal” that ALR land will remain farmland forever.