Change of heart(land): Farmers moving toward cash rent
Farmland rental structures have shifted over the decade
By Kaitlynn Anderson
Cash rentals keep growing.
The 2016 Census of Agriculture revealed that while ownership of agricultural land in Canada has remained relatively stable, there has been a shift in the form of rental agreements favoured by farmers, according to an article written by Craig Klemmer, a principal agricultural economist with Farm Credit Canada (FCC).
“Between 2011 and 2016, land owners and tenants shifted towards cash rental agreements,” Klemmer said in his article. “As a proportion of all farmland rental agreements, (cash rentals) grew faster than other agreement types.”
In fact, this proportion increased by 10 per cent to a total of 34 million acres, according to Klemmer.
There was also a 3 per cent increase in the amount of farmland managed by crop share agreements, leaving this style of arrangement to account for a total of 4.5 million acres.
Klemmer discussed the possible reasons for this shift toward cash rents in an interview with Farms.com yesterday.
“Like all contracts, farmland rental agreements are continually evolving to reflect the changing operating environment,” he said. “Some possible reasons (for the) shift in rental agreements towards cash rents include: easier management of crop inventory, shift in risk tolerance both for the land owner and land renter and ease of contract.”
As the agricultural industry remains healthy across the country, so does the demand for farmland for both purchase and rent, Klemmer said.
Currently, strong farm cash receipts and historically low interest rates provide support for the market, according to Klemmer.
“There are going to pockets that are being influenced by local trends, but at the aggregate the market remains well supported,” he said.