How To Buy Agricultural Land In Canada, & Who Can

Introduction to how to buy agricultural land in Canada: Agriculture is a major industry in Canada. Only 7% of Canada’s land can be cultivated. Canada’s agriculture faces many challenges. These challenges relate to crop protection, soil protection, labor, climate change, and health. Farmland in Canada has historically been praised for increasing population and global food demand. Farmland has also served as a value-added portfolio and has proven more predictable than equity markets. Canada is the world’s fifth-largest exporter of agricultural and food commodities and a leading producer of high-quality, safe agricultural and food products. About half of Canada’s total agricultural land is used for growing crops. There are approximately 160 million acres of agricultural land in Canada.

Agricultural land is cultivable, permanent crops and permanent pastures. The ground beneath the gardens and the land falls temporarily. Land left as a result of transplantation has been removed. Permanent pasture is land used for fodder for five or more years and includes natural and cultivated crops.

A guide for how to buy agricultural land in Canada/who can buy agricultural/farmland in Canada? Can foreigners buy agricultural land in Canada?

Canada is the fifth-largest agricultural exporter, according to Statistics Canada. Canada’s agriculture, agri-food, and agro-based sectors are the cornerstone of Canada’s economy and food security – and agriculture is its foundation. This shortcoming is a significant gap in current federal policy. Farmland is an indispensable resource as Canada adapts to changing domestic and global drivers, including market fluctuations, urbanization, seasonal barriers to the global food supply, and growing demand for local food and farmland facilities.

Agricultural Land Importance in Canada

Agriculture is an important part of the economy in Canada. Promoting agricultural management helps ensure agricultural land is cultivated and available for future food production. The strategy is designed to respond to threats to agricultural lands, such as urban development, food security in sustainable production systems, and the desire to protect agriculture for environmental and open space purposes. Incentive programs, land use control, and integrated programs are different ways to protect agricultural land. Incentive programs seek to persuade farmers to retain their land in agriculture through various tax incentives, agricultural zoning, or purchase or transfer of development rights.

Farmland and farms – Only a small fraction (7%) of Canada’s land area is suitable for farming. Farms vary based on topography, soil type, and location or latitude.

Agricultural and use methods in Canada

Land use control methods include land-use zoning, land banking, and right-to-farm legislation. Zoning of land use for protection of agricultural land limits non-agricultural development. Land trusts, segregation, and facilities refer to donating development rights to a governmental or non-governmental organization, usually forever. Farm-to-farm legislation protects farmers from disturbing lawsuits and allows farmers to practice agriculture in the normal way. The integrated approach focuses on land conservation, multi-functionality, and smart development. Multi-functionality knows that a specific resource base serves more than one purpose. For example, recognizing the economic, social, and environmental values of agriculture. Smart Growth is a vision for urban development management which focuses on reducing low-density development in areas adjacent to urban centers. Agricultural land conservation strategies must make agricultural subsidiary support measures more effective and monitor effectiveness.

Farming is Canada’s main industry, and there are plenty of resources available for those pursuing a career in agriculture. Agriculture can be defined as the systematic and controlled use of animals and the environment to improve the human condition. Agricultural land is designated as agricultural land under the Act and includes agricultural land under the former Act, according to the Agriculture Land Commission Act. Commonly occurring in the fields, agricultural activities are carried out on agricultural land to produce agricultural products. Although agricultural land is primarily used to produce food for human and animal use, agricultural activities include fiber and fuel (including wood) and other organic-derived products (such as pharmaceuticals, etc.). Each province’s environmental laws regulate lands allocated for agricultural use and are subject to federal regulations. Each province has land-use planning legislation that includes natural heritage protection and environmental protection legislation that prohibits using land when its use affects areas subject to conservation efforts.

The amount of agricultural land in Canada is the basis for discussing public policy issues, from food security to sustainability to competition. Despite the interest and basis of policies such as land use control, there is little documentation on the total area and structure of farms in Canada. This report documents changes in the total amount of farms in Canada using agricultural census data.

Factors affected for buying agricultural land in British Columbia

Some agricultural land is more suitable for some crops than others. British Columbia’s diverse agricultural industry needs land from all walks of life to thrive. There are three limiting factors in British Columbia;

Climate – It is the thermal energy and moisture inputs available for agricultural production.

Soil variability – Soil properties and characteristics affect the ability of the soil to sustain agricultural products.

Topography – Topography can limit access and ability to use farming tools.

Some important physical, chemical, and biological materials are important to the agricultural system. These are supplied by the soil, moisture, and sun in the form of light and heat energy, plants, animals, and biological agents. These inputs are necessarily controlled in productive agricultural systems, as far as possible, through appropriate agricultural practices. The more competently the land base provides and maintains this information, the more capable and productive the land becomes as agricultural land. The cost of agribusiness, physical access, and market irregularities can result in a certain portion of the land being used or left fallow, which may vary over time.

Can foreigners buy agricultural land in Canada?

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Foreign investors who want to buy agricultural land in Canada should consult their legal advisors before making an offer. Some provinces have strict restrictions on the number of acres owned by foreigners or corporations, while others allow non-residents to buy up agricultural land unrestricted.

Where is the best agricultural land in Canada?

Saskatchewan is home to the greatest amount of agricultural land in Canada.

Principles for buying agricultural land

Guidelines for agricultural land use planning legislation provide context and barriers to what local governments must and should do to protect their agricultural land. An effective policy, legislation, and governance framework allows local governments to choose how much they want to take advantage of this opportunity. In this context, it is helpful to assess the quality of the agricultural land use planning framework and to understand how well it works and why. To that end, we’ve identified the following four principles, which are outlined below;

Maximize stability
Minimize uncertainty
Integrate across jurisdictions
Accommodate flexibility

Good reasons to protect agricultural land in Canada

1. Food Security and Local Food Supply – Protection of agricultural land helps to ensure a steady supply of locally grown produce. People choose local to get fresh produce and support the local agricultural economy. Worldwide, 75% of our food is commercially prepared using oil. Oil shortages and rising prices could put a premium on local production. If Ontario needs to be self-sufficient in its food production, we must take action to protect the rest of our productive lands.

2. The economic benefits of agricultural land protection – Ontario’s farm and food processing sector generates over $ 30 billion in sales – more than 35% of Canada’s agri-food sector GDP – and employs 700,000 people. Saving agricultural land also provides financial stability for local governments. Studies in Canada show that farmland pays more for municipal services, while taxes on residential use fail, on average, to cover costs.

3. Environmental protection – Farmland provides food and shelter for wildlife, helps control flooding, protects wetlands and watersheds, and maintains air quality. They can absorb and filter wastewater and recharge groundwater. The desert, on the other hand, accelerates climate change, making it a strong case for field protection.

Land use planning for agriculture in Canada

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Land Use in Canada — (pic source: pixabay)

Canada’s agricultural protection is primarily a matter of land use planning, for which responsibility is divided between the federal, provincial, and municipal governments. While the provinces retain jurisdiction to formulate provincial land use policy and emphasize provincial interests, such as the protection of agricultural land, they delegate most of the land use planning responsibilities to municipalities so that they can manage the systematic development of their areas, including agricultural lands.

In addition to agricultural land use planning, other legislative procedures, such as the right to farming legislation and preferential tax policies, are also used to support farmers and maintain the basis of agriculture.

Agricultural Land Capability Classification System – The agricultural land qualification classification system used in BC depends on the availability of maps for a specific province area.

Canada Land Inventory (CLI) – CLI maps are 1:50,000 in scale and are used throughout Canada.

BC Land Inventory (BCLI) – BC has developed a classification system known as the Land Capability Classification for Agriculture in British Columbia.

The classification of agricultural potential consists of two main components;

(1) the qualification class and

(2) the qualification subclasses

Capability classes and subclasses provide information on the degree and type range for agricultural use. In addition to the land qualification designation, they are useful for assessing land use planning and management practices.

Capability Class – Both systems define seven classes of land capacity, applied to land from class 1 to climate and soil so that a farmer can access the widest range of crops up to class 7. Land that is considered uncultivable has no potential for soil-linked agriculture. Intermediate classes may be unsuitable for some agricultural uses but highly suitable for others. Even Class 6 land, except for traditional, cultivable agricultural activities, can still sustain local and perennial uncultivated agriculture, often used for grazing animals.

Capability subclass – There is also a subclass in each of the seven classes that identifies the limits or special administrative methods required to improve agricultural capacity. Limitations include topography, calculus, soil moisture, and low fertility. Management practices include drainage, irrigation, stone picking, and fertilization.

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Changes in agricultural land types in Canada

The agricultural census divides farmland into crops, summer fallow, pastures, and other lands. Cropland includes field crops, vegetables, fruits, nursery crops, and sod. Tame and Seeded Pasture is land farmers use to graze animals that have been improved in some way (i.e., not wild pasture). All other lands include uncultivated pastures, land used for buildings, maple syrup lands, uncultivated lands (privately owned woodlands and wetlands on production operations), and all other agricultural lands.

Cropland – Over the past 40 years, the farmland used to grow crops across Canada has increased by 23.3 million acres, or 33.3%, leaving 93.4 million acres in the country. In Canada, the increase in total arable land area was fairly evenly spread, with every province except Nova Scotia and New Brunswick showing an increase in net farmland. Alberta and Saskatchewan, in terms of absolute quantity, showed significant growth in the last 40 years, with their 6.4 and 14.2 million acres (33.8% and 54.6% growth) accounting for 88.6% of the total cropland growth in the country.

Tom or Seeded Pasture Land – The amount of time and seed pasture in Canada has also increased. There was a net increase in pasture land, and its area decreased in six out of ten provinces. Alberta, Saskatchewan, and Manitoba accounted for 195% of the country’s pasture land. The relative share of total farm pastures in the eastern provinces averages less than 5%, while in the prairies, it is close to 10%.

Summer fallow land – While cropland and pasture generally increase over time, the small decrease in the area under national cultivation was due to a large reduction in the amount of land used for summer-fall. Saskatchewan, with its large farmland and the common use of land separation to retain moisture, was the largest contributor to the reduction in the area allocated for the summer.

Are there restrictions on buying agricultural land in Canada?

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Consider any restrictions on local and foreign investors, legal entities, and natural persons. The agricultural land restrictions and procedures vary across Canada;

British Columbia – There is no restriction on ownership of agricultural land. However, there is an agency in British Columbia that controls the non-agricultural use of certain farmland. The Agricultural Land Commission has added about 4.7 million hectares of land in British Columbia to the Agricultural Land Reserve, a land-use area where agriculture is a priority.

Alberta – Ownership of agricultural land by non-residents and non-Canadian entities may not exceed 20 acres (foreign ownership of agricultural and recreational land ownership act and land regulations). Penalties for violating this rule include fines, imprisonment, and judicial land sale. Alberta’s law restricts foreign ownership of agricultural land to 2 parcels of 20 acres. These regulations do not only affect Canadian citizens, permanent residents, and companies in Canada.

Suppose a foreign person or entity is interested in the land violating the rules and regulations. In that case, the court may order a judicial sale of the foreign owner’s interest in the land. However, the legislation does not apply to certain commercial uses of land, including land acquisition for that purpose;

Any activity for which the right of entry may be granted under the Surface Rights Act (Alberta).
Establishment of an industrial, processing, manufacturing, commercial, or transportation facility if the area for a separate facility does not exceed 80 acres;
Constructing a pipeline; extraction of sand, gravel, mud, or marl if the area does not exceed 160 acres for a separate project or development.
However, the owner must disassociate himself from the land within three years of the completion or abandonment of that purpose.

Saskatchewan – Agricultural land owned by non-residents and non-Canadian property companies may not exceed 10 acres in total, according to the Saskatchewan Farm Security Act. Exemptions may be granted by the Saskatchewan Farmland Security Board in limited circumstances, including a temporary waiver that gives non-residents time to settle.

In Saskatchewan, non-residents can acquire up to 10 acres of Saskatchewan agricultural land. “Residents” are Canadian citizens or individuals who live in Canada for at least 183 days per year. The establishments are partly owned by non-residents but are controlled by Saskatchewan residents, or their farming corporations can buy up to 320 acres of agricultural land. In comparison, foreign control corporations and other entities are limited to 10 acres.

Under any terms and conditions, the Farmland Security Board consents to foreign entities to acquire more than 10 acres of land. The Farmland Security Board may issue an order requiring a foreign owner to relinquish its land and obtain a court order to assist in enforcement, including a restraining order, declaration of nullity, or a judicial sale.

Manitoba – According to the Farmlands Ownership Act, 40 acres of agricultural land is owned by non-resident and non-Canadian-owned entities in Manitoba. In limited circumstances, this rule may be waived by the Manitoba Farm Industry Board.

Only the following people can buy land in Manitoba without restriction;

Canadian citizens and permanent residents;
Corporations controlled by Canadian farmers;
Municipalities, local government districts, and government agencies;
Private corporations and other entities that are 100% owned by Canada;
Individuals set up to satisfy the Manitoba Farmlands Ownership Board intend to become permanent residents or Canadian citizens within two years of gaining interest in the farmland.

Any foreign entity that acquires an area of more than 40 acres will have to set aside this additional area within a year.

Ontario – There is no restriction on ownership of agricultural land. In Ontario, agricultural land use planning operates under the 2005 Provincial Policy Statement issued under the Planning Act. However, planning authorities regulate utilization and lot adjustments in basic agricultural areas, designated according to the Canada Land Inventory Classification System. According to the law, the Minister of Agriculture is required to review the policy statement every five years.

Quebec – Quebec is not allowed to own agricultural land by non-residents and non-Canadian proprietorships except by the Commission De Protection Du Territoire Agricole Du Quebec (a law respecting the acquisition of farmland by non-residents). An application must be accompanied by an affidavit stating the reasons for acquiring agricultural land, its intended use, and whether the applicant intends to settle in Quebec.

Recent legislation amendments have further restricted foreign investors’ access to agricultural land. To qualify as a Quebec resident under the new rules, an individual must now be a Canadian citizen or permanent resident and at least 1,095 days (i.e., three years) of the 4 years immediately preceding the acquisition of agricultural land.

A corporation or other legal entity is considered a Quebec resident if Quebec residents own most of the shares or interests; most of its directors are based in Quebec. Considering a request for the purchase of agricultural land by a non-resident, the Commission will allow if:

The land concerned is not suitable for cultivating the soil or raising livestock. Or
The non-resident intends to settle in Quebec and stay in Quebec for three of the next four years and, at the end of that period, become a Canadian citizen or permanent resident.

The amendments introduce an annual limit on the number of hectares non-residents can purchase. The Commission may allow the acquisition of only 1,000 hectares of farmland annually by foreign corporations or individuals not intending to settle in Quebec, although it may examine additional applications.

Any acquisition of agricultural land in Quebec violating the law is prohibited. The Commission may order a non-resident to set aside the farmland within six months of the issuance of the order, failing which he may apply for permission for the judicial sale of the land. Deliberately acquiring or selling farmland in violation of legislation may result in a fine of at least 10% of the value of agricultural land for an individual or at least 20% in the case of a corporation or other legal person.

Nova Scotia – There is no restriction on ownership of agricultural land.

New Brunswick – There is no restriction on ownership of agricultural land.

Newfoundland and Labrador – There is no restriction on ownership of agricultural land.

Prince Edward Island – Corporations and Individuals are limited to buying agricultural land up to 1,000 and 3,000 acres, respectively, according to the Land Protection Act.

Agriculture land use rights in Canada

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Agricultural land-use planning, restrictions, and usage rights change across Canada. In Ontario, the tenant must withhold 25% of the rent and submit it to the Canadian Revenue Agency (CRA) as withholding tax.

Ontario Farm also offers a property class tax rate program, which enables farm properties to be taxed at 24% of the municipal residential / farm tax rate. The Commercial Tenancy Act, which deals with agricultural land in Ontario, regulates the rights of owners and tenants to lease agricultural land, including confiscating livestock or livestock for rent arrears. Agricultural leases are generally negotiated freely throughout Canada but will be subject to the requirements of any provincial legislation, such as the Ontario Commercial Tenancy Act.

How is security over agricultural land generally designed and completed to raise finance?

In each province, agricultural producers can mortgage their land, and some provinces regulate the process. Mortgages are usually in writing and are registered as property in the relevant provincial land registry office.

There are specific provisions in the Federal Banks Act to encourage the agro-industry;

In exchange for full ownership of the secured property, a bank may offer money to buyers of agricultural products and farmers without actual provision of guarantee (Section 427, Bank Act). Collateral may include crops (with certain limits), livestock, goods, and property.
You must register with the Bank of Canada’s provincial or regional agent before giving notice of your intent to provide security. There is a written agreement between the parties, which includes credit applications, assignment documents, and an agreement outlining the terms and conditions of the security agreement.
Also, farmers can obtain financing to buy assets like equipment, machinery, crops, and livestock through security agreements over personal property. Personal property may include annual plants, cash crops, and goods. By doing so, the security interest is fulfilled through registration in the relevant Provincial Personal Property Registry.

Disclaimer: Please check with local agricultural/government bodies for accurate information on who can buy agricultural land in Canada and how to buy agricultural land in Canada.

Conclusion

If you live in Canada, this article may give you some insights into buying agricultural land in Canada.