Large farms are big business

By Vern McClelland

October 20, 2016 12:00 AM

Farming is still a family run business in Western Canada, however, the amount of land and capital investment per operation is increasing substantially.
I’m fortunate in that my rural background and active involvement in the livestock industry often sees me shoulder to shoulder with farmers and ranchers.
No, you won’t see me at the local coffee shop or input supplier every morning, but my two avocations as Realtor and rancher do serve to keep me somewhat in the loop on issues facing these multi-million dollar operations.
Of course, my number one involvement is in the purchase and sale of land on behalf of our group’s clients.
I help develop lease contracts as well.
Or, when asked, provide a perspective on current market value on property for succession planning, estate transfers, or relationship breakdown.
As farms and ranches grow larger managing stakeholder relationships also becomes increasingly challenging for both the owner and tenant.
In the midwest, it’s not uncommon for there to be petroleum and natural gas surface leases in place, plus right of ways for access to installations, pipelines, or other utility corridors.
Then there are those people who want to use your land as a recreation resource so they can hunt, quad, snowmobile, or picnic on it.
I really don’t have a problem with that but too many don’t even ask for permission, chew up fragile soils with their vehicles, leave gates open, or worse.
We were rounding up cattle in one pasture this fall and a black Angus cow decided she didn’t want to come home yet.
She has vanished without a trace, and hopefully is holidaying with one of the neighbour’s herds but early moose season is upon us with truck tracks evident everywhere on the parcel—I just hope she isn’t residing in someone’s freezer!
But I digress.
Personally I think it is a mistake for large farms to have multiple residences, workshops, and grain handling systems all in one location.
I understand we all like to be close to our work; it’s more efficient that way.
In these times of increased crime in the rural districts, it potentially offers more security, too, though thieves are becoming more brazen.
Should the day come when the operation doesn’t flow from one generation to another, this type of farmyard becomes much more difficult to market and as a consequence, there will be reduced residual value.
It becomes a strategic—long term planning—versus tactical—short to medium term convenience—consideration.
All I’m suggesting is to consider moving the grain handling system across the road so it can either be sold as a business unit on its own, or leased out thereby creating an ongoing revenue stream.
The bonus is a less restrictive site for expansion when needed.
A similar amount of thought should be given to the location of buildings serving as the base for value added enterprise, such as a seed cleaning plant or light manufacturing.
Having these on separate title with direct access from a municipal road will make it more attractive to future buyers of the present business or again, the opportunity to repurpose as an investment property.
We really don’t talk about safety enough on our farms.
Clustering commercial and residential structures on one site, then introducing large equipment into the equation brings risk to family members and visitors alike.
I was helping do chores for a neighbour last winter and snagged an overhead line while exiting a corral with the front end loader’s grapple up.
Thankfully it was only a service cable to a barn, and not a main power line.
I simply didn’t think about it being there as our yard site is newer and we took the opportunity to put all our electrical lines underground as buildings were put in place.
But that’s simple fix.
Going past a house too quickly not thinking about the grandchild that may be playing in the yard may create lifelong hurt.
There is more than one way to develop infrastructure for a growing enterprise; I’m just asking you give it a little more thought that’s all.

Vern McClelland is an associate broker with RE/MAX of Lloydminster. He can be reached at (780) 808-2700, through www.vernmcclelland.com or by following the Midwest Group Lloydminster on Facebook.

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