Going ... going ...

By Geoff Lee

June 30, 2016 12:00 AM

Selling farmland by unreserved public auction is becoming a trend with demand for land up and aging farmers in Western Canada looking to retire quickly.
That’s the word from John Clarke, director of Ritchie Bros.’ agricultural division in Saskatchewan and Manitoba.
“The auction sales through our unreserved auction method is certainty of sell,” said Clarke, who noted it’s becoming more of a viable sale option in a strong agricultural economy.
“We know it’s going to sell on sale day; there’s going to be a new buyer on sale date, so it just gives people piece of mind and clarity and moving forward with their retirement plans.”
The average age of Canadian farmers was 54 in the most recent Canadian census of agriculture in 2011.
“We are in a very aggressive market place right now and with the majority of farm customers being older and close to retirement age, we see there’s going to be a lot more assets become available,” said Clarke.
He also said the trend to unreserved farmland auctions is helping to bring young farmers into the sector
because the ability to make money is higher than it ever has been before.
“It’s a nice trend to see having some young people involved back in the industry,” said Clarke.
Ritchie Bros held an unreserved farmland and equipment auction Monday in Saskatoon including 31 residential lots in the Murray Lake Sunrise development near North Battleford.
The sale also included combines, hydraulic excavators, swathers and crawler tractors.
“As farms get bigger, people want to see competition at a sale as opposed to trying to do it through a private method or through a realtor,” said Clarke.
The auction sale, he said, provides that competitive atmosphere where multiple bidders can come in and bid against each other.
In an unreserved auction there are no minimum bids or reserved prices with everything sold to the highest bidder.
“So you know you are in a very strong economy when you have people that are tying to outbid one another at an unreserved auction sale on farmland,” Clarke said.
Clarke said the unreserved auction method provides the competitive atmosphere you need to get the best price that can be higher than a real estate sale.
“When you have a very desirable piece of land and you have competitive bidders, you are simply going to have a strong result,” stressed Clarke.
Ritchie Bros. says most of the buyers of farmland are other farmers but some investment firms have also bought land outside of Saskatchewan.
Clarke noted people are looking to expand and take advantage of farmland which is in short supply and high demand in a very strong agricultural economy.
“When one comes up for auction it does peak some people’s interest for sure,” said Clarke.
Clarke said most of Ritchie Bros.‘s sales been setting records or matching the highest price per acre in certain RMs in Saskatchewan, Manitoba and Alberta.
He said there is no differentiation in demand for either cropland or livestock farms for auction.
“Right now, it’s just land in general,” he said.
The majority of land that Clarke sees for auction has typically been cropland, but he said anytime they’ve come across any piece of pasture land there’s all kind of interest in that too.
“The ag economy is strong on the grain side and it has been very strong on the livestock side as well,” he said.
Clarke said there is a noticeable uptick in farmland auctions in the last five years as word spreads that it’s a great way to move farmland.
“In the past, especially in unreserved auction sales, there was some risks involved, but with our business we are able to market it globally and definitely market within the region to make sure every interested party is going to know about your farmland,” he said.
Unlike Vancouver’s real estate market with prices driven up by offshore buyers and speculators, there are no offshore buyers of farmland allowed.
“The agricultural land is treated differently than your residential property would be, so there are rules and regulations in each jurisdiction in each province that regulates which buyers can purchase farmland,” said Clarke.
He said the rules in Saskatchewan are a little bit tighter than they are in Alberta and Manitoba and even B.C. that prohibits or limits how much offshore money or out of province, or out of county money is available at a sale.

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