The scale of the opportunity

The numbers are staggering. Nearly 75% of Canada’s CAD785+ billion farmland asset base is expected to change hands within the next decade^1,2. This translates to more than half a trillion dollars in family-held farmland wealth that will need to transition to the next generation. This is not a distant scenario – it is already unfolding, and it will only accelerate.

Canadian farmland is not just land. It represents heritage, livelihood, and one of the crown jewels of the national economy. It underpins Canada’s role as one of the world’s leading agricultural exporters⁴. In 2024, agriculture and agri-food contributed more than CAD149 billion to Canada’s GDP, representing about 7% of the total economy, while supporting millions of jobs and supplying essential commodities to global markets³. With nearly two-thirds of farm cash receipts tied to exports, the stewardship of Canadian farmland is inseparable from global food security⁴.

At a time of climate volatility, geopolitical instability, and fragile supply chains, the reliability of Canadian farmland has never been more important. Its continuity, however, depends on collaboration among farm families, investment capital, and policy makers.

Shifting demographics: Canada’s aging farmers

The demographic reality underscores the urgency. Over 60% of farmers are now 55 or older, while the portion of farmers under 35 has decreased from 12% to 9% over the past two decades^5,6.

The pipeline of young farmers is shrinking.

Meanwhile, farmland has never been more valuable. In Ontario, where farmers require a minimum of about 1,000 acres to run viable operations, high-quality farmland now commands above CAD20,000 per acre. The next generation of farmers faces significant barriers to entry when factoring in land and equipment costs. In the Prairies, viable operations often require 3,000 acres or more to achieve sufficient scale, when considering various factors such as the crop prices and average yields for the major crops grown in each region. The capital intensity is daunting, and many young farmers lack access to sufficient equity or credit.

The outcome has been consolidation. Canada’s farm count has dropped from nearly 247,000 two decades ago to fewer than 190,000 today, a 23% decline^6,7. Ownership remains overwhelmingly in family hands, but fewer families are carrying the responsibility.

Addressing this challenge requires buying and optimising farmland and leasing it back to farming operators. This approach not only provides an exit opportunity for existing farmland owners but also lowers the barriers for the next generation of farmers looking to expand their operations or enter the farming industry. 

Succession planning: Building bridges with capital

Despite the scale of the issue, only 12% of Canadian farms have a written succession plan. This gap reflects the complexity of family dynamics, diverging interests among heirs, and the difficulty of discussing money, control, and legacy. Often, the conversation happens too late when illness, financial strain, or family disputes force decisions.

Closing the succession gap is not only about planning, but also about having access to capital resources. Even well-prepared families struggle to align transition goals with the financial means to achieve them. That is where investor capital becomes essential. Here are some of the ways that value can be created for both investors and farm families.

• Diversified returns for investors: By purchasing, optimising, and managing farmland with discipline, the goal should be to deliver steady risk-adjusted returns from this uncorrelated asset class.
• Liquidity for the retiring generation: Decades of work deserves to be rewarded. Providing capital that allows farm families to unlock their equity and exit gracefully is essential.
• Improved cash flow management: Capital provided during the sale and leaseback of farmland can be used to reduce debt, enhance cash flow management, and strengthen the financial health of the farming operation.
• Continuity for the next generation: Operators who want to farm should not be excluded because of capital barriers. By leasing land back to farmers, the industry can provide them with an opportunity to scale or start their operations without incurring the financial burden of purchasing farmland.
• Contributing to global food security: By keeping farmland productive and family-operated, Canada can continue to provide the world with essential food.
• Preserving natural capital: An essential part of any land management strategy should be to optimise farmland by enhancing natural capital in partnership with farm family operators. This both increases long-term returns to investors and reduces the risk of the asset class.

Embracing the road ahead

The coming decade represents both a challenge and a generational opportunity. Canada is on the cusp of the largest wealth transfer in its history, representing over half a trillion dollars in farm real estate value.

Private capital has a critical role to play. Leasebacks, shared-equity partnerships, and joint ventures are practical, proven mechanisms to ensure continuity. When structured thoughtfully, they create true win-win outcomes, whereby investors gain unique access to scarce assets, and farm families are provided with new opportunities.

For investors, this transition of wealth creates a timely opportunity to enter an uncorrelated asset class. Farm values have continued to appreciate at a steady pace over the long-term, driven by many factors including the increased global demand for food and the rapidly decreasing supply of land to meet this demand. By investing alongside farm families, investors can capture differentiated returns while contributing to one of Canada’s most vital economic and social outcomes.

Disclaimer:  This article is for informational and educational purposes only and reflects the personal opinions of the author, Kent Willmore, Founder & CEO at Crescero Natural Capital. It is not intended as investment advice or a recommendation to purchase or sell any financial product. Prospective investors should consult with a qualified financial advisor and conduct their own due diligence before making any investment decisions. Investments in farmland are subject to risks, including market, regulatory, and environmental risks. Any performance data in this article is for illustrative purposes only and may not be indicative of future results. This document has not been reviewed or approved by the Ontario Securities Commission (OSC) or any other securities regulatory authority.
 

1 Statistics Canada. Balance sheet of the agricultural sector, at December 31 (Table 32-10-0056-01).

2 Manitoba Co-operator. The dawn of a new generation: Celebrating Canada’s farming future.

3 Agriculture and Agri-Food Canada. An overview of the Canadian agriculture and agri-food system.

4 Global Affairs Canada. Agricultural trade data and market access.

5 Statistics Canada. Census of Agriculture, 2021.

6 Statistics Canada. Census of Agriculture, 2001.

7 Statistics Canada. Census of Agriculture, 2021 (Table 32-10-0232-01).