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Alberta

High costs putting farming out of reach for young people, affecting all Canadians

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MONTREAL — When Myriam Landry started raising goats for their meat in 2018, she started small — because she had to.

She opened Chèvrerie aux Volets Verts, in St-Esprit, Que., with two goats; she couldn’t afford a large herd and chose animals small enough that she could handle on her own while pregnant with her third child.

“I should have started bigger … but then I would have needed more money, which I didn’t have,” Landry, 33, said in a recent interview from her farm 50 kilometres north of Montreal. 

“It’s really hard for young people to start … I don’t even have land, I don’t have tractors, even my goats (I paid for) on loans.”

The rising cost of land is making it harder than ever for young farmers to enter the business. And those barriers come at a time when a growing number of older farmers are planning to leave the industry. Organizations promoting farm succession worry that if young people are unable to enter the industry, only the largest companies will endure, reducing the diversity of crops and livestock and widening the gap between Canadians and their sources of food.

“The main challenge right now is really the cost of agricultural land,” said Benoît Curé, co-ordinator of ARTERRE, a program that pairs aspiring farmers with landowners and farmers planning to retire.

Curé said multiple factors are contributing to rising prices, including real estate speculation — especially near Montreal suburbs — and strong competition for the best soil in a province where only around two per cent of the land is suitable for farming.

Last year, the price of agricultural land rose by 10 per cent, which isn’t unusual, he said in a recent interview. “Over the last 10 years, we’ve had annual increases of about six to 10 per cent.” The average dairy farm in Quebec is now valued at almost $5 million, he said, almost double what it was in 2011. 

With 20 per cent down payments usually expected for farm purchases, “you have to almost be a millionaire before starting your agricultural business,” Curé said. If young people can’t afford to get into farming, then most rural communities risk being left with two or three large farms, he lamented.

Landry, like more than half of the aspiring farmers who have worked with ARTERRE, is renting her space. Her small operation is located on a former dairy farm that’s now used for hay and cereal crops. Her farm has now grown to 40 female goats and a handful of males for breeding. There’s enough space in her barn for 60 females, she said, but she has enough demand to support 100. 

And while starting small has allowed her to open a farm, it has also come with its own challenges. Goat meat, she said, is uncommon in Quebec, and financial institutions are hesitant to lend to money for an operation they aren’t familiar with. 

Lenders, she said, “don’t want to finance it, because they don’t know it, and that makes it really hard.”

Farming has always been a capital-intensive industry — with high costs for land, equipment and inputs — but prices across Canada have risen above the revenue that can be generated from that land, said Jean-Philippe Gervais, the chief economist of Farm Credit Canada, a Crown corporation that lends to farmers.

“The relationship between the price of the land and the revenue that can be expected from the land — that ratio is the highest we’ve ever seen,” Gervais said in a recent interview. “So we’re really at prices that are the highest we’ve ever seen, not just in absolute value in dollars per hectare, but also relative to what can be generated in income.”

It’s now rare for farmers to turn a profit from land they buy just by farming it, he said, adding that most farmers only make their money back when they sell. Large, established farms can fund the purchase of more land from the revenue generated on land that’s already been paid for, he added.

But even large farms are challenged by high costs. A survey of more than 3,600 farmers released last month by Quebec’s farmers association found that 11 per cent are thinking about closing over the coming year. The Union des producteurs agricoles found that costs on Quebec farms rose by an average of 17.3 per cent in 2022 while revenues rose by an average of 14.7 per cent.

A report released in early April by RBC found that 40 per cent of Canadian farm operators planned to retire over the next decade and that 66 per cent didn’t have a succession plan. 

Julie Bissonnette, the president of an organization that represents young Quebec farmers and promotes farm succession, says there are many young people interested in agriculture.

“Sometimes you hear there’s no one to take over, but it’s not true, there are a lot, but we need to make sure they’re able to set up,” Bissonnette, with the Fédération de la relève agricole du Québec, said in a recent interview. “It’s so much money.”

Urban sprawl and the influx of people moving to rural areas to work remotely is putting increased pressure on Quebec’s arable land, Bissonnette said.

Landry, meanwhile, said she’d like to see more small-time farmers because they tend to build close relationships with local residents. 

“We need to reconnect the public to what they do three times a day, which is eat,” she said. “Know where your food is coming from. If you can’t grow it yourself, find someone who does it the way you would do it.” 

This report by The Canadian Press was first published May 7, 2023. 

Jacob Serebrin, The Canadian Press

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Alberta

Alberta’s fiscal update projects budget surplus, but fiscal fortunes could quickly turn

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From the Fraser Institute

By Tegan Hill

According to the recent mid-year update tabled Thursday, the Smith government projects a $4.6 billion surplus in 2024/25, up from the $2.9 billion surplus projected just a few months ago. Despite the good news, Premier Smith must reduce spending to avoid budget deficits.

The fiscal update projects resource revenue of $20.3 billion in 2024/25. Today’s relatively high—but very volatile—resource revenue (including oil and gas royalties) is helping finance today’s spending and maintain a balanced budget. But it will not last forever.

For perspective, in just the last decade the Alberta government’s annual resource revenue has been as low as $2.8 billion (2015/16) and as high as $25.2 billion (2022/23).

And while the resource revenue rollercoaster is currently in Alberta’s favor, Finance Minister Nate Horner acknowledges that “risks are on the rise” as oil prices have dropped considerably and forecasters are projecting downward pressure on prices—all of which impacts resource revenue.

In fact, the government’s own estimates show a $1 change in oil prices results in an estimated $630 million revenue swing. So while the Smith government plans to maintain a surplus in 2024/25, a small change in oil prices could quickly plunge Alberta back into deficit. Premier Smith has warned that her government may fall into a budget deficit this fiscal year.

This should come as no surprise. Alberta’s been on the resource revenue rollercoaster for decades. Successive governments have increased spending during the good times of high resource revenue, but failed to rein in spending when resource revenues fell.

Previous research has shown that, in Alberta, a $1 increase in resource revenue is associated with an estimated 56-cent increase in program spending the following fiscal year (on a per-person, inflation-adjusted basis). However, a decline in resource revenue is not similarly associated with a reduction in program spending. This pattern has led to historically high levels of government spending—and budget deficits—even in more recent years.

Consider this: If this fiscal year the Smith government received an average level of resource revenue (based on levels over the last 10 years), it would receive approximately $13,000 per Albertan. Yet the government plans to spend nearly $15,000 per Albertan this fiscal year (after adjusting for inflation). That’s a huge gap of roughly $2,000—and it means the government is continuing to take big risks with the provincial budget.

Of course, if the government falls back into deficit there are implications for everyday Albertans.

When the government runs a deficit, it accumulates debt, which Albertans must pay to service. In 2024/25, the government’s debt interest payments will cost each Albertan nearly $650. That’s largely because, despite running surpluses over the last few years, Albertans are still paying for debt accumulated during the most recent string of deficits from 2008/09 to 2020/21 (excluding 2014/15), which only ended when the government enjoyed an unexpected windfall in resource revenue in 2021/22.

According to Thursday’s mid-year fiscal update, Alberta’s finances continue to be at risk. To avoid deficits, the Smith government should meaningfully reduce spending so that it’s aligned with more reliable, stable levels of revenue.

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Alberta

Premier Smith says Auto Insurance reforms may still result in a publicly owned system

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Better, faster, more affordable auto insurance

Alberta’s government is introducing a new auto insurance system that will provide better and faster services to Albertans while reducing auto insurance premiums.

After hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, Alberta’s government is introducing a new privately delivered, care-focused auto insurance system.

Right now, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.

“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates.”

Danielle Smith, Premier

“High auto insurance rates put strain on Albertans. By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”

Nate Horner, President of Treasury Board and Minister of Finance

Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.

Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered. These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.

Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.

In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5% increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.

Albertans have been clear that they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.

By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.

“Keeping more money in Albertans’ pockets is one of the best ways to address the rising cost of living. This shift to a care-first automobile insurance system will do just that by helping lower premiums for people across the province.”

Nathan Neudorf, Minister of Affordability and Utilities

Quick facts

  • Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
  • A 2023 report by MNP shows
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