Farmland stays if farmland pays
By: Sara Hershoff Creemore Echo
Thousands of acres of prime farmland in Melancthon Township – including land once slated for a mega-quarry – now owned by Bonneville Financial Inc. will continue to be farmed for decades to come, says company president Tom Eisenhauer. But, he adds, the only way to ensure preservation of agricultural land is for farming to be profitable.
“For so long we have looked at farming through a social policy lens but if we really want to protect our farms and the land the best way to do it is make sure farmers make money,” Eisenhauer told a crowd of 200 concerned citizens, who braved blowing snow and road closures last Saturday to attend a Food and Water First meeting sponsored by NDACT at the Shelburne arena.
Eisenhauer established Bonnefield in 2009 to provide low-risk, long-term investments in the form of Canadian farmland to Canadian citizens and investment groups with a minimum of $150,000 to buy in. With stable lease income, returns driven by trends such as global population growth, land and water scarcity, climate change, changing diets worldwide, as well as an expected increase in property values over the next 20 years, Bonnefield expects the $320 million dollars it has invested to date in more than 40,000 acres across the nation will pay off for his company, investors and for rural communities like Melancthon.
The Bonnefield President assured his audience that he recognizes community concerns around property flipping, mineral rights, windpower, future quarry development and the land remaining productive as farmland forever.
Regarding the issues surrounding wind he said Bonnefield has no intention of entering into new agreements, but will honour any existing agreements on their lands. As far as signing over mineral rights and flipping of the property, he said that neither of these are part of Bonnefield’s strategy, and therefore are unlikely to happen while he is managing the investment.
According to its website the firm aims to keep land for agricultural use by leasing it “to successful, growth-oriented Canadian farm operators” thus helping to reduce mortgage debt, improve cash flow, finance expansion, and facilitate succession planning. The goal, according to Eisenhauer, is to create partnerships with farmers so the land is treated with a sense of stewardship “as if” the farmer does own the land.
“Our farmers need to do two things – they need to adhere to our Standards of Care and they need to pay the rent. After that how they run their operation is up to them,” he said. Among the standards are regular soil testing; top soil conservation practices; crop rotation, pesticide, nutrient and woodlot management plans as well as surface water and erosion controls. These standards have been put in place by the landowner to ensure “the quality and productivity of the farmlands are protected and enhanced with the goal of long-term returns” as well as protect their trademarked, “Farmland for Farming.”
Carl Cosack, Chair of NDACT (North Dufferin Agricultural and Community Task Force) told the Echo that the relationship between his group and Bonnefield has been positive to date. He said he believes Eisenhauer’s stated intentions. When asked if the model of purchasing farmland and leasing it back to producers is a good one for those working the land, Cosack said, “I believe that farmers should own their own land, but that is just my personal opinion and it is old-school thinking.”
The $50 million Melancthon Township land deal was a departure for Bonnefield. Their usual process for land acquisition is to buy appropriate land from individual farmers and lease it back to them. The process with the seller, Highland Companies, was different said Eisenhauer. But he said he thought the deal would be good for everyone.
“When we heard the news that the mega quarry project was cancelled we saw a huge opportunity.” Bonnefield contacted Highland Companies in December of 2012 and set up a meeting in Mid-January of 2013 with Baupost – the hedge fund involved. Negotiations on the land began early February and the deal was official on July 16, 2013. In order to ensure crops were harvested Bonnefield leased the lands backed to Highland Companies while Bonnefield continued accessing and making plans for their new acquisition.
“Because of restrictions put on us during the process we were a little uncertain of what we bought,” said Eisenhauer who credits Melancthon Mayor Bill Hill, Carl Cosack with helping them work through their planning process.
Bonnefield’s management practices are focused around farmland only, Eisenhauer said, and to that end the company is working to sell off many of the buildings that came with the purchase. “We are trying to get as many of the buildings back into the hands of the local residents and business owners as we can,” said Eisenhauer at the community meeting.
To date Bonnefield has sold off or leased about a dozen of the 24 homes and buildings that came with the purchase, and it has liquidated some of the lands that do not fit its investment goals. Thus far it has leased the appropriate farmland it acquired in Melancthon to six different operators. Land is being leased at between $300 and $330 per acre according to Carl Cosack.
Cosack said he feels that getting people back into the homes and revitalization of the community is important for the ongoing safety of the land, “We need people to live on and care about the land so if this becomes an issue years from now there is still that connection; that this land is not just forgotten… so there are people who will continue to watch.”
At the April 5 meeting, support for Bonnefield’s vision was prominently voiced by two outside community groups in attendance. One is fighting 800 acres of possible residential development in Midhurst, and the other is the long-battling folks who oppose the Pickering Airport. Members of these groups stood up and asked if Bonnefield would consider buying in their back yard.
As the meeting wound up Eisenhauer cautioned his audience that nothing is forever. “And what happens when Tom Eisenhauer is gone?” he asked. “We hope we can be trusted – but we are only people. Unless this land is profitable there is no guarantee.”