Saskatchewan`s Rural Rent Act allows a tenant to re-enter the crop after seven days of termination with the landlord, although the lease has been terminated. This provision also applies when the tenant has been put up for sale. If the parties do not agree, they may question the support of the National Mediation Committee. Land cultivated by cultivation agreements has also increased, but not to the same extent. During the census period, the number of hectares managed by this type of agreement increased by 3% to 4.5 million hectares. Despite the increase in hectares, the total cost of shared rents decreased by 13% (and was only 0.5% as a percentage of total land expenditure). While Ken Evans thinks most operators are good at analyzing their costs, they will eventually back off if they pay too much rent, and he shares a crude guide for calculating a starting point for rents: take four percent of the country`s value, add taxes and divide by the number of hectares. The crop-action agreements are another animal that has a complete variety of structures such as the percentage of the crop or a percentage of the margin. „Many of these structures are seen as more flexible,“ says Sullivan, who was previously an accountant at MNP, but most are ultimately more expensive for farmers than cash rents. „For the last eight or nine years, the share of the crop has been higher than cash, if you have a bad (production) year, you pay in advance.
It is a business decision, but the numbers indicate that the farmer pays more in the long run and is profitable. From an insurance perspective, he thinks it`s often a combination of crop and hail insurance and guys that works best, especially when production costs go up, in part because of rent on leased acres. While public insurance covers returns, what banks generally want. Efficiency and safety are part of the land equation, but the blow to cash flow from rising 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.“ One of the ways farmers get more land is to keep travelling far from home, but Evans is not sure how they get it. „Some people go 40 or 50 miles to rent land, and I`m not sure how effective that can be. They need huge areas to be worth it. „It`s hard to find 3,000 hectares overnight and the producer will end up with overcapacity,“ says Evans, although some of that risk can be mitigated by longer-term contracts. „Many operators who will take over significant land will negotiate a lease of 3 to 5 years, with the possibility of renegotiating the annual rental rate, but not the availability of land.“ 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.
This is especially true for young farmers who are trying to enter a market with few opportunities to buy land. Sullivan points out that in the United States, half of the land is leased and many farms are 100% leased in Europe. He sees that Canada is moving in the same direction, which means that young farmers will need a new way of accessing credit, perhaps by using insurance as collateral.