The rental rate is important for cash flow, but catch-22 for producers is to know that these hectares will never be available again. Despite a possible loss of a certain amount of cash rent, a producer may decide to take over these hectares in order to complete part of the farm`s strategic plan, spread or replace fixed costs. Click here to download the Cropping leasing agreement Between 2011 and 2016, landowners and tenants converted to cash leases. As a percentage of all land leases, they grew faster than other types of contracts. The share of land exploited increased by 10% between 2011 and 2016 (to 34 million hectares). Unsurprisingly, the total rent of Canadian producers increased by almost 40% during this period. Cash rents in 2016 accounted for more than 4% of total agricultural spending, an amount that increased by 0.7 percentage points over total spending during the census period. It was only last spring that Tim Hammond saw farmers oppose the expected annual rent increases of the 50,000 hectares he manages for investors at Tim Hammond Realty in Biggar, Sask. Efficiency and safety are part of the land equation, but the blow to cash flow from escalating rental prices is different. “It`s counter-intuitive,” Evans says. “There is more land that can be rented, but I think this is counteracted by a lack of land available for sale, so the rent price goes up.” Farmers should have realistic expectations in terms of yield and costs, he says. From the lenders` perspective, the FCC would look at debt service capacity and see if there is room for an unexpected shock, such as volatile weather conditions, commodity prices or trade disputes that we are all seeing now. “If a farmer signs (lease) contracts that would hinder the ability to repay debts, then FCC could say that this is not the best plan for us as lenders.
We are not in a position to develop the strategy for the farmer, but we can help highlight the errors. The area devoted to ag land in Canada increased from 160.2 million hectares to 158.7 million hectares between 2011 and 2016. When the total number of Ag Acres fell in Canada, the number of hectares leased increased. In 2011, 36.8 million hectares, or 23% of the year`s total arable land, had been leased or leased. Just over 40.1 million hectares (a quarter of the total ag area) were mined in 2016 on leased or leased land. This is a 2% increase in leased land in Canada between 2011 and 2016 and a 9% increase in leased arable land over the period. This means that in 2016, nearly 100 million hectares, or 63% of Canada`s total agricultural area, were exploited by the landowners themselves. At that time, state leases added an additional 21 million hectares, or 13% of Canada`s arable land. In fact. So the rental country works for landlords who are on the return of investors in an otherwise weak investment market, but how can those who rent it allow princely growth and growth? This is a question that is in mind, as the competition for the available land becomes fierce and not always friendly, the days of rental almost exclusively by family and neighbors end quickly.