Remove the Cultivated Land Lease 45 Per Cent Premium

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Remove the Cultivated Land Lease 45 Per Cent Premium

Res #: 5-20A
Number: 5
Year: 2020
Midterm: No
Expired: No
Responses Received: Yes
Departments: Saskatchewan Ministry of Agriculture

WHEREAS the provincial government has been actively reducing its inventory of cultivated agriculture lands since 2008;

WHEREAS in November 2015 then Minister of Agriculture Lyle Stewart stated “Our first priority for sale is cultivated lands as they are easily identifiable and the least likely to have any ecological or environmental value because they are already broken. This program allows Saskatchewan farmers and ranchers, individuals who have managed the land for the better part of the century, to purchase this land and realize the benefits of ownership.”;

WHEREAS in December 2017 the provincial government initiated a new program focusing on selling approximately 300,000 acres of cultivated or formerly cultivated lands. Letters were sent to approximately 1,100 lessees indicating that a 10 per cent purchase price discount was available until March 2018 or a 45 per cent rental premium would apply to the standard formula rate in 2018. The 45 per cent rental premium in 2018 follows a 15 percent premium in 2016 and a 30 per cent premium in 2018;

WHEREAS the December 2017 communication to lessees referenced a 45 per cent increase to the 2018 formula rental rate only; however, the 45 per cent rental rate premium was applied to the 2019 rental and the intent is to apply to 2020 lease rates as well;

WHEREAS the provincial government failed to communicate its intent to continue to maintain a 45 per cent rental premium beyond 2018 and lessees may have made alternative business decisions;

WHEREAS the provincial government did offer incentives to purchase leased land, which were exercised by some lessees to continue operations with the parcels, some lessees, for lack of a better term, flipped the purchase incentive rather than face the certain reduced operating profits due to the rental premiums. It is questionable whether the results of these actions were beneficial to local communities from a social and economic standpoint;

WHEREAS a portion of the lessees that did not exercise the incentives may have be making sound business decisions by not assuming more financial risk, some lessees felt compelled to take on heavy financial burden and stress due to the rental premium policy;

WHEREAS though leased lands may have been previously cultivated under different government policies or economic circumstances does not mean that they should be cultivated today.  Furthermore, because a cultivated or formerly cultivated land may be easily identifiable which facilitates program implementation it does not mean it is a good policy to continue for extended periods of time;

WHEREAS several parcels that are leased as part of this program will have minimal value remaining for the lessee to pay a 45 per cent rental premium once property taxes and education taxes are paid on the land;

BE IT RESOLVED that SARM lobby the provincial government to review the 45 per cent rental premium policy on cultivated and formerly cultivated lease land.

Response From The Ministry of Agriculture:

April 14, 2019

It is not a core function of government to manage agricultural lands that have no higher environmental, ecological, or economic benefit. Lands identified as cultivated and formerly cultivated are best owned and managed by private landowners. Incentives were provided to clients to purchase these leased lands. Should a client choose not to purchase their leased lands they can surrender their lease or continue to lease with the premium rate applied. Clients are notified prior to April 1 of each year what their annual rent will be. This notification includes a reference to the fact that certain lands will be subject to a 45 per cent rental premium.

David Marit - Minister of Agriculture