So you want to… farm in Canada

Canada still has some untouched frontiers for bold farmers looking for cheap land, as well as a supportive government and a lower cost of living. We look at the opportunity.

Hundreds of farmers left Britain for Canada in the late 1990s and early 2000s as the BSE and foot-and-mouth crises rocked UK agriculture. Since then, sharp rises in Canadian land prices and soaring dairy quota costs have slowed the influx of British farmers to a trickle.   

However, there are still ways to find a foothold in the country and make a decent living, says Jason Bent, director of policy research at the Ontario Federation of Agriculture.

One such avenue for farmers with a pioneering spirit, says Mr Bent, is to establish large units in some northern areas, such as northern Ontario, where the provincial government is promoting the resettlement of a large belt of about 1m acres of clay land.

“The area has production potential and has been farmed in the past but has since been left to return to wilderness,” says Mr Bent.

See also: International farmland: Guide to the global land market

He estimates the land value to be as low as $1,000/acre (£582/acre), although there is little infrastructure, a short growing season between harsh winters and a tiny population.

“It is one of the last frontier areas where there is an opportunity to settle although, as we say in Canada, it’s a place where you don’t get to choose your friends,” Mr Bent says.

What to consider

“Providing farmers do their homework and appreciate the differences involved between Canadian and UK farming, it is still possible to make a successful switch,” says Mr Bent.

While Canada is a single country with a federal government, it is made up of 10 provinces and three large territories, which have a high degree of autonomy in policy and strategy, he says.

Therefore, interested farmers should consider the rules in each province and never assume that what is true in one, is true in another.

Weather and land characteristics are also diverse and distances between population centres can be large. Even within a single province the conditions can vary enormously, says Mr Bent.

For example, in the central eastern province of Ontario, the majority of the population and prime arable land is located in the South, where competition means prices are at a premium of around $15,000/acre (£8,750/acre).

In contrast, the larger, northern part of Ontario is sparsely populated, with cold winters and heavy forestation.

Prospective buyers need to think carefully before moving to a sparsely populated area, cautions Hugh Maynard, former executive director of the Quebec Farmers’ Association and owner of development consultancy Quanglo.

“The distances are huge and it can be a seven-hour round-trip to the nearest vet. The sheer scale of some arable operations requires a different mindset.

“Arable yields are lower where soils are poorer quality in the western provinces, and the operation may have to extend to thousands of acres to be profitable,” says Mr Maynard.

Growing conditions are different, with a short season between May and October. The winters are long and the onset of spring is rapid because the temperature and day lengths swing very quickly and can catch out unsuspecting farmers.

It means operations are intense and require a lot of large machinery and equipment, he explains.

He says most incoming farmers take five years to fully adjust.

Set-up costs can be high

Certain areas and industries have higher setup costs that prospective buyers should be aware of.

Land values have risen by 10% a year over the past decade and more productive arable areas now often match values in the UK, meaning there has been a consolidation of land into fewer hands, with competition from large companies and investors.

The dairy sector is also tougher to break into, with expensive and limited quotas making it almost impossible for start-up businesses, Mr Maynard warns.

“Quota rarely becomes available but when it does prices are between $25,000 [£14,802.50] and $30,000 [£17,763] per cow,” he says.

This means, to set up a 100-cow unit, farmers would need to invest $2.5m (£1.48m) before purchasing land, accommodation, cattle and machinery.

Beef and sheep are potential openings for newcomers. However, uncertainty, driven by US president Donald Trump’s threat to renegotiate the North American Free Trade Agreement is causing beef prices to fluctuate.

“The US is our main market and competitor and as Donald Trump is ramping up the pressure to renegotiate Nafta, it is a worrying time for beef producers. Many are looking at cropping where possible,” Mr Maynard says.

Government support mechanisms

Canadian farmers benefit from federal and provincial government support in the form of insurance schemes, contingency funds and interest-free loans.

The most popular programme is Agri-Insurance, where the government pays half the premium to protect against incidents such as poor crop yields or low prices. Payouts are triggered under the policy when yields fall below 80% of the historical level for an individual farm.

Further protection against income loss comes from the Agri-Recovery programme, which is a government-backed disaster relief programme paying up to 70% of income losses in emergency situations.

Some provinces also take part in the Agri-Invest Programme – a contingency fund match-funded by the federal government and local administration. For every dollar the farmer puts in – up to $15,000/year (£8,881.50) – $2 (£1.18) is added to provide a growing pot of money for a rainy day.  

New businesses can also secure short-term, interest-free loans, which can be taken out to cover times when cashflow has slowed –  to pay bills while crops are in storage, for example.

For young entrants, some provinces provide one-off, start-up payments of up to $40,000 (£23,684). This is dependent on qualifications and experience so, for example, a farmer’s daughter who completes an agricultural degree should obtain the maximum allowable funding.

The payment is per head, which means spouses can combine their individual payments to create a fund of as much as $80,000 (£47,368).

Further help for entrants is also available through government-guaranteed loans to encourage banks to lend to new starters. The federal government underwrites the risk for the first five years of production, picking up the bill if anyone defaults.