Offering Farm Land for Lease: A Retirement Solution

7 November '13

A recent article in the Financial Post highlighted a common reality among farmers: when it comes to retirement, their main plan is the farm. While some farmers make use of traditional retirement strategies like RRSPs, the value tied up in farm assets during one’s career often becomes the primary source of retirement income. For many, the most significant asset is the farmland itself. This article cites a financial planner who correctly states that “retirement is a little trickier for farmers who have a lot of their wealth tied up in the land.” The trickiness gets even trickier when we consider the downsizing farmer, who may prefer to scale down the size of their operation instead of exiting farming and retiring abruptly.
The article also hinted at a critical paradox when it comes to the farm land owner’s retirement planning, particularly given today’s trends in land values.  Farmland values have increased steadily for decades, and in many Canadian regions have hit record highs. “Despite rising land prices, inventory remains very tight across the country – farmers just don’t want to sell because of strong commodity prices and family ties to the land.” Even though landowners stand to gain considerable returns from the sale of land, many simply don’t want to sell at this time. A recent Re/Max farmland report described current demand for farmland as “unprecedented.” Given this scenario, there’s an important end solution, or interim strategy, that wasn't suggested in this particular article: farm land leasing
Leasing farm land offers a win-win solution for landowner and farmers. In a recent blog post we talked about how more farmers are renting land, since rising land prices have prevented them from purchasing land for their farm operations. They have turned to land rental as a viable means of expanding their land base, and a solution that’s more realistic for managing the capital expenses and cash flows associated with farming. With an active market of farmers looking for land, and increasing trends of downsizing and retiring farmers who’d prefer not to sell their land, offering farm land for lease is a definite solution. Landowners can scale back their own operations or retire altogether, while receiving ongoing income from land rental.  Farmland leasing is a strategy worth considering for every farmer who has downsizing or retirement on the horizon. 
Finally, the Financial Post article mingled in discussion on another trend: “urban people buying up land so they can move to the country – not all of them planning to farm the land right away.” In these cases, leasing farmland also makes the most sense for all. Instead of letting a productive asset sit dormant, especially during a market of unprecedented demand for farmland, leasing land is an option well worth exploring.  
Do you own farmland? To find out how’s award winning farm land for lease model can help you find the best tenant for your farmland – all at no cost – contact a member of our team today!