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Supporting a New Generation of Farmers

FARMSTART

50% of our farm assets will be transferred

75% of our retiring farmers don’t have successors

Agriculture Agri-Food Canada, 2006

In the next 10 years…

Speculative land values

‘Sun-set’ agriculture

“Crisis” farm sales

Challenges of Farmland Transfer

New Entrants

Innovation, Diversification, Resilience

Farm Community Revitalization

900 registered users ~ 390 active farm-seekers ~ 150 active farm-listings

40,000 eat Soup to “save the farmlands that feed us!”

Community Financed Farms

> Shared farm model

Farmland Futures Equity Fund

> Succession, lease-to-own

Farmlands for Farmers Feasibility Assessment of 2 models

COMMUNITY FINANCED; SHARED FARM MODEL

Owner NGO owns and managesOn-going Management and maintenance carried by rents from farmers.

Land Base Divides into several distinct lease sections, minimum 20 acres workable. Some shared infrastructure. Likely for intensive vegetable production and small animal operations.

Housing • Farms on settlement boundaries don’t offer housing? • Build housing units in a “living centre” close to original homestead? • Sever housing lots and tie to land rents?

Tenure Land leases and housing leases.

5 years to start, then 60 years ?

Equity Farmers can sell their farm business and access to lease, & leasehold improvements

Financing Community Bonds & Patient mortgage holder

Return on Investment

Rents from farmers. Fixed ROI for bond holders; Amortization of mortgage? Income tax breaks for farmland easement?

Exit of Capital Optional buy back of Bonds? Amortization of loans?

Farmland Protection

NGO holds land forever, for farming, (Easement?)

Risks Lack of investment; Economic crisis (reducing investor appetite)Planning rejections; zoning/ planning problemsDifficulty in negotiating for landRapid changes in land pricesRapid changes in interest ratesTenant turnover, RFPs increase management costs, breaks in cash flow

FARMLAND FUTURES; LEASE TO OWN

Owner Fund buys farm. Original farm owner can stay lease free for 10 years. Fund places a farmland easement on the property.

Land Base Full farm and infrastructure.

Any scale or type of production.

Housing Build secondary house for new entrant, if not there. (close to original farm house on property; or on ‘retirement’ lot – that can be tied to the farm property?)

Tenure Net Farm lease, 5-year terms with on-going right to renew and option to buy?Or lease-to-own after 5 years?

Equity Farmers can sell business and right to renew lease? Farmers have right to purchase, so can invest in business in start-up stage.

Financing Equity Fund Investors & a Patient mortgage holder.

Return on Investment

Rents from farmers. Investor dividends. Appreciation? Interest and Amortization of mortgage loan? Income tax breaks for farmland easement?

Exit of Capital Sale capital in a lease-to-own arrangement.

Farmland Protection

Farmland easement held by Ontario Farmland Trust, must be used for farming.

Risks Lack of investment; Economic crisis (reducing investor appetite)Planning rejections; zoning/ planning problemsDifficulty in negotiating for landRapid changes in land pricesRapid changes in interest ratesTenant business fails, new tenant negotiations take time

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OPTIONS FOR FARMERSWhat will motivate the retiring farmers to be involved?

What value can we offer them?How can we negotiate a reasonable sale price?

How do we offer a reasonable rent for new entrants?

IMPACT INVESTING How can we find large patient capital partners?What are reasonable returns on investment?

EXIT STRATEGY FOR INVESTMENT CAPITALHow do we create the ability to get investment capital out?

Esp. if we don’t sell the farm? And if we sell the farm with an easement, for less than purchase

price?

PLANNING AND TAX IMPLICATIONSDoes this require charitable income tax receipts for farmland

easements?Are the costs of planning exemptions too much?

Implementation of PPS is varied across municipalities. Can we influence planning approach changes to make it easier over time?

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Prime farmland protection

Tax incentives (for farmers and investors)

Community Investment Tools

Changes in planning policies

Shared savings programs for new farmers (RFSP)

Enabling Environment

Our Farmlands for Farmers Feasibility Assessment is supported by:

Our Supporters

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FARM A 2009 2010 2011 2012

Gross income 23,000 162,000 247,000 328,000

Expenses 15,000 81,000 123,000 164,000

Net income 8,000 81,000 124,000 164,000

FARM B 2009 2010 2011 2012

Gross Income 102,000 147,000 182,000 269,000

Expenses 98,000 99,000 110,000 182,000

Net Income 4,000 48,000 72,000 87,000

Farm B owns 100 acres,, approximately 20 in production. 2 lead farmers, who work part time off farm.

Expenses include salary.

Farm A leases 7 acres, primarily greenhouses production. 2 lead farmers.

Expenses include salary.

FARM C 2009 2010 2011 2012

Gross Income 19,000 38,000 64,000 84,000

Expenses 14,000 48,000 50,000 44,000

Net Income 5,000 -10,000 14,000 40,000

FARM D 2008 2009 2010 2011 2012

Gross Income 34,000 50,000 67,000 76,000 80,000

Expenses 25,000 32,000 37,000 40,000 46,000

Net Income 9,000 18,000 30,000 36,000 34,000

Farm C rents 5 acres of land. 1 lead farmer who works part time off farm.

Expenses do not include salary

Farm D leases 5 acres of land on another farm, for no rent. Lead full time farmer.

Expenses do not include salary.

New Farmers : The complexity of Start Up, Viability and Equity