A view from B.C.
As dairy and poultry thrive, and grapes shine, many farmers seek growth in the face of high land prices.
British Columbia might be one province, but when it comes to having a diversified agricultural economy, it embodies many distinct regions.
The Lower Mainland leads the way with dairy, poultry, eggs and greenhouses. For tree fruits and grapes, try the Southern Interior. You could visit the Caribou or the north Thompson and Okanagan regions and see beef herds that wouldn’t look out of place one province further east. Berries and vegetables? Check out the Fraser Valley and southern Vancouver Island. Finally, head north and east to the Peace Region, where grains and oilseeds dominate.
For Bob Richards, RBC Royal Bank’s Abbotsford based Vice-President of Agriculture and Agribusiness Banking for B.C., it’s all in a day’s work. For the past 20 months, he’s led a province-wide team of agricultural account managers serving all these sectors and others.
Steady, but diverse
“A large proportion of the industry is supply managed, so that tends to operate on a relatively even keel,” says Richards, “although the dairy and feather sectors are contending with high land costs in the Lower Mainland and high quota costs as well. The avian flu outbreak certainly had an impact.”
On the cattle front, Richards believes many producers are still feeling the effects of BSE. Cull cow prices remain depressed, with the border still closed to breeding age animals. Softening calf prices caused by higher grain prices were an added challenge in the fall. Larger ranches are in the best position to compete in the long run and RBC counts a number of these among its customer base.
In the Peace Country, producers received a double boost in 2006: strengthening cereal and oilseed prices and generally good crop quality. The emerging demand for biofuels and ethanol should benefit producers here, as in other parts of Western Canada, and most producers are optimistic about 2007.
While the apple industry in particular faces pricing issues, the tender fruit and berry sectors exhibit both strength and challenges. Blueberry producers had continued strong prices in 2006. Grape growers enjoyed a bumper 2006 crop and should continue to benefit from the increasing demand for B.C. wines and continued investment in the B.C. wine industry. B.C.’s greenhouse industry, which mainly ships to the U.S., is benefiting from reduced energy costs, with many converting to wood in the face of a strong Canadian dollar. Richards sees consolidation in the mushroom sector, as producers service the U.S. market and make some inroads into Alberta.
The impact of high, high land prices
During his 28-year career, Richards has worked for two large financial institutions and one government ministry spanning three provinces. After nine years as an RBC agrologist in Ontario, he worked for three years with B.C.’s Ministry of Agriculture and Fisheries in Victoria. Following eight years with FCC, six of them based in Regina, Sask., Richards headed to London, Ont., where he led the RBC Ontario Agricultural Risk Management team. He returned to B.C. in November 2005 to his present position, when he noticed some big changes and considerable development.
In Richards’ view, what makes B.C. distinct from other parts of Canada isn’t just its sectoral diversity. It’s the sky-high land prices in the province’s agriculturally powerful Lower Mainland, where many producers farm on the urban fringe.
“Notwithstanding B.C.’s Agricultural Land Reserve, farmland prices in the Lower Mainland are often five to 10 times what you’d see in southwestern Ontario,” he says. “Expensive land tends to produce a different mindset among producers. Despite the pressures that go with high prices, I have confidence in the ability of the industry to operate profitably, today and into the future.
“We’re seeing some migration of expanding and second-generation operations to the Interior, and even into the Prairies, to take advantage of more favourable land prices.”
Some of the related challenges for producers are how to finance growth or transition a business to the next generation. Because high land prices leave little room for error in farm expansion or succession planning, Richards and his account managers work diligently with clients to develop long-term strategies to meet their personal and business goals.
Richards is enjoying the day-to-day challenge of helping clients move their business forward in a competitive market for land, capital and people.
“B.C. is one of the most dynamic markets in which RBC operates, with one of the largest Ag centres, and one of the most diverse client groups in the country,” he says. “We’ve targeted the top managers in each farm sector, and today many of them are RBC clients. That’s something we’re proud of.”
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