Saturday, December 19, 2015

Agricultural Land Reserve - Friend OR Foe

Whereas, the government of British Columbia has through the application of legislation effected a circumstance that has farmland inflating in price due to speculation and yet precludes ownership from taking advantage of the perceived opportunities that drive inflation of land values and whereas, government legislation impairs the full spectrum of land use thus effecting a reduction in opportunities and by extension lost revenue, the government is responsible to provide expanded opportunity OR to reimburse for opportunity forgone by the affected parties.
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Any discussion regarding state encroachment on the use and deployment of private assets needs to be considered from first principles.  The state needs strong rationale to encroach on the choices of ownership, a clear public good must be being served. While “land rights” or “property rights” are excluded from the Charter of Rights and Freedoms, the document was drafted with a longstanding Westminster or Common Law tradition as its backdrop, a tradition that has held private property paramount in the execution of the law. One can assert quite comfortably that the vast majority of court business flows from, or results in the actuation, or transfer of an asset.Land is an asset that holds stronger importance than other assets, particularly in the Anglo economic tradition where land travels from one generation to the other.



The Agricultural Land RESERVE has been put in place so that the land is held in reserve to satisfy a perceived common good. The common good summarized as; in the event of disturbance in trade or a calamitous event we have in RESERVE the land resources to provide food for our population, to hold land in RESERVE to provide for ongoing support of an agricultural industry and its benefits to our economy and ongoing food security, to hold land in reserve to protect against development for industrial and residential uses and to protect the athletics of the British Columbian countryside.  When Land fell into the ALR it affected ownership by limiting the options of ownership for its use in the interest of a widely held belief in a common good.


It is inherent in the right to liberty in the context of the Common Law tradition and by extension in the Charter of Rights and Freedoms, is that assets that have been accumulated by an individual or relatives, assets held in ownership, can be deployed in a manner that said individual sees as most favorable to their interests and values. This is a widely held understanding and it must be respected. When the state or collective perceives a common good justifies that, all or a portion, of an individual’s private assets, must be forfeited for a common good, this is an act of expropriation. 



The reason why government avoided expropriation under the advice of legal experts was to circumvent exposure to a requirement to reimburse landowners for the opportunity forgone. There was opportunity forgone at the implementation of the ALR and in the administration of the act there is still opportunity forgone. It is incumbent upon the government to remediate or mitigate the loss in this case. 



Excerpt from BC Land Act.

"expropriate" means the taking of land by an expropriating authority under an enactment without the consent of the owner, but does not include the exercise by the government of any interest, right, privilege or title referred to in section 50 of the Land Act;

The value in land stems from its value as a tradable asset in the context of the law, there are “spiritual” elements to land ownership that are intrinsic in nature, which is why state encroachment on land ownership choice is so sensitive. It is readily apparent that a state action directed at a common good, that reduces the value of land or curtails the lands actuation in a manner that is seen as most favourable for the ownership is a de facto expropriation when there is a resulting reduction in income generation or degradation in asset value. This assertion is supported to some degree by the fact that when settling around the expropriation of rights of ways, the courts recognize more than just the value of raw land, they also recognize the cost to ownership that impediments make – operational considerations fall under judgement.

When the Agricultural Land Reserve (ALR) was implemented there was callous disregard for this reality, I believe one can use the term RIGHT safely.  Throughout the history of the ALR to this day and with the contemporary issues with respect to operational choices of ownership, this issue is given to little wait. In review the literature, there is a near arrogance in the tone of discourse I find most offensive, I believe this is true of many landowners as well.


Contemplations on the Degree of State Encroachment on Land Ownership


Given the argument above, one needs to find justification for the present degree of state encroachment on land ownership.  State encroachment on ownership has gone well beyond the intent of the act, briefly summarized as preserving farmland, people are advocating the Agricultural Land Commission (ALC) actually assess proportional income and limit income from “non-farming” activities to a percentage of total income. This is more than an affront of all things wholly with respect to private asset management in the context of common law, it can be easily be demonstrated to contravene the intent of the act – income supports ownership by provision income against the cost of ownership, thereby, supporting land stewardship. This degree of micromanagement by the ALC is indicative of mission creep and the unnecessary expansion of state influence over private land. One understands that in the administration of an act that the need to enforce does at times challenge first principles, it is the writer’s observation that there is undue encroachment here.


I think also that reviewing the justification for encroachment is a worthy exercise at this point. The entrenchment of the ALR / ALC is understood, but in reviewing its mission in the context of modern knowledge and technological advancement one can perhaps begin to get a clearer view of the ALC mission and perhaps its augmentation or retraction. The writer offers the following dialog as a point of contemplation, an opportunity for reflection as a means to forge a future that sees to the collective values at stake and yet provisions for either the right to maximize income for ownership as the market dictates OR for the state, in the interests of curtailing Faustian effects to reimburse owners for opportunities forgone.

In reviewing some of the historical documentation related to the creation of the ALR many of the assertions there are almost laughable in retrospect. There were assertions made with respect to the “world food shortage” as a justification to “protect land for food security”.  The document making the assertions was written in 1973, I would invite any rational person to review history from that point until now and state that the ALR is justified on the basis of food security – that is to say that during the period from 1973 until now, there has never been any threat to the provinces food security that would justify the expropriation of lands. The “threat” to food security was ill-conceived then, history has shown this to be true – it is justifiable to ask is the concern misplaced in the future.  The fact is that food is more abundant now than it has ever been, in the world context and the distribution of food is more efficient than it has ever been – modern agriculture is a miracle that we enjoy every day.

It was with the wisdom of the time that the British Government planted Oak forests to ensure a ready supply of wood to build ships, post-1800 metal became the material of choice – the forests still stand, they have other values perhaps, however, the original purpose was overtaken by events.   To some extent, one can argue this is true of the ALR. There are technologies at play now that render the necessity for farmland defunct for food production, there is economic and environmental value and viability in farm buildings erected in densely populated urban areas.  Both the economic and engineering modelling is favourable for “high-rise” built “farms” – this is in no way “futuristic” it is occurring now at the margins in the form of urban rooftop farms and the like. This is offered to challenge one of the strongest underlying “values” supporting the ALR and the resulting state encroachment on land ownership and now to a greater extent the actual management choices of ownership.


The Court’s Interpretation of Permanent Alteration of the Land

Excerpt Provide from Discussion Paper – Court Decision Reasons

[51] The Regulation also requires that an agri-tourism use be temporary and seasonal. A golf course requires alteration of the land in the form of particular landscaping, sand traps, water hazards etc. Photographs that were put into evidence show changes of precisely that kind to the petitioners’ property. Those changes must remain in place as long as the operation of the golf course continues and cannot reasonably be described as temporary.

Taking this expert as it stands; the Justice is passing judgement on the duration of action against the backdrop of reclamation from a recreational use back to a strictly agricultural use. If food security is the value for preservation, the court rejected temporary in the case of the golf course, with undue consideration to permanence.  What is relevant to state values and the subsequent intrusion on choice is the cost of reclamation to farming in the event the land is required for food production and the timeliness of response to reclaim. The justification for state intrusion here needs clarity; on what basis has the judge determined that golfing and related alterations to the land to be permanent – when they are clearly in no way permeant.  In the event of a calamitous event, war or world famine, the demand for food would elevate prices substantially and the result is a cost benefit assessment for reclamation to farming greatly altered from now. The calamitous event would render either reclamation viable or, more likely, another solution would be deployed.  The impetus for action as is determined by real events should determine land use as opposed to government officials trying to anticipate the future or arbitrarily impose “state values”; so long as the state imposed value can be readily reclaimed or met in some other fashion.

The assumption that a golf course is a permanent impediment to agricultural use is certainly wrong. The use of farms as venues for weddings or other gatherings offers no impediment to agricultural use and offers the opportunity to diversify income, clearly, this should be encouraged.  The assertion that farms offer unfair competition to other venues is in no way a valid argument. In government policy we seek to gain a regional advantage in any way we can, we should make policy that lets the market work and where regulation offers an arbitrage we should support the most efficient model as opposed to propping up the less efficient model.



Why Managing Operational Income is Harmful & Inappropriate


The government's only valid concern is stewardship as related to agricultural land in the context of the ALC mandate. ALC has no mandate to determine where income comes from; their attempts to limit "non-farm" income are grossly off the mark and well outside ALC mandate.

Please see attached several business model concepts I view as works in progress; Mid Frazer Agro was rejected by the supply management complex in British Columbia, one hopes that opportunity will be offered to resurrect the project. The Winer / Brewery/tourism operation requires capital and one awaits word on the land in question. The Crofter model has farm viability at its heart. They all draw on vertical integration and or companion enterprise, land use rarely offers income at parity with the operations it supports.


The ALC is part of a complex of regulators that introduces complexity to pursuing opportunities like these; government needs to move from obstacle to facilitator.  In the case of the ALC, there are steps that can be taken to firm ALR inclusion and arrest uncertainty and better serve the mandate of the organization.


Relevant Links
Douglas Lake - Cattle, Timber, Land Development & Real Estate

Vineyard & Tourism Operation - Crofters - go to documents at bottom of page
Link to Relevant Documents 

The aforementioned models capitalize on companion enterprise and or vertical integration to bring viability to a given land base.  It is critical that when integrating primary production with secondary processing or when seeking to occupy as much of the supply chain as possible, that appropriate scale is accessed. Scale plays a role in market access, that is to say, there needs to be adequate product volume to occupy “shelf space” to have critical mass in the market. The retail aspects of any product chain have greater margins or income than the primary production elements of the product supply chain (Normally True).  So trying to assign income levels to various production strata is errant, what is of the essence is whether the land is being unitized and whether the enterprise, in general, is supporting the ownership of land.


A building, regardless of its use, so long as it generates income supports the ownership of the land and can finance stewardship of the land – what is relevant with respect to the building is the extent to which it encroaches on land in the ALR slated for preservation – it is conceivable that the farm has areas that are unsuitable for agriculture due to the presence of some geophysical reality, a pocket of land that is within the ALR in an errant fashion. That land should be permitted to be utilized to its full potential.  It is almost always the case on any site that there are places like this.

If the foregoing fails to challenge the ALC commission in its entirety, it certainly challenges the prospect of further encroachment on the landowner – I believe it justifies a degree of retraction. The ALC, as it the case with all government “departments”, is finding reasons to extend its reach – perhaps it is time, as a matter of government policy, to exercise some containment on expansion.

Conclusion

I think it is a widely held view in society that the ALR has value; it holds value to the writer. I love the countryside, I have an attachment to the land – farms and humanities interface with the land is a thing of beauty. Value, at the society level, or personal level, has no obligation to be found in reason – but when the collective encroaches on people's right to manage private assets, especially when there is a cost to those affected; the government has a responsibility to mitigate loss.


This is an excerpt from a document written in 1973 lamenting that speculation was inflating land values. The challenge with “land speculation” and land values persists to this day. The ALR has in no way constrained speculation, and the ALR having put up impediments to non-agricultural development has restricted the supply of land for development – hence increasing the price of land and exacerbating the influences of speculation on land value. I have studied land values in British Columbia and can find very little relationship between the price of agricultural land and the land's ability to generate income when directed toward an agricultural enterprise.  There are cultural propensities and speculative realities driving inflated agricultural land values. The only way to curtail inflated agricultural land values due to speculation is to make the land in the ALR permanent; if the value of that land is real, then we need to make the commitment to preserve it. To stop speculation on development revenue we need to say there will never be development done on ALR land. When we do that, the people holding title to ALR lands will incur a loss, as people did when the ALR was implemented. When through government action people incur loss – the government must reimburse people for their loss. It is extremely unfair to circumvent the responsibility to land ownership to repay for loss in the face of actuation of policy for a perceived common good. 






Of these seven stated desired outcomes I would say in the main the ALR / ALC has helped more than hindered, save one. There is no benchmarking to draw on to know what would have transpired had there been no ALR - one can only speculate that it has been beneficial. There has been no improvement in access to land for farming for young people – in fact the opposite is true – farmers are older now than they ever have been. So in deliberations related to administering the ALR, the ALC must seek to expand opportunity for land use so that there is revenue sufficient to support viability – farms tend of form a gestalt over time and revenues that flow from enhanced associative enterprise will flow to the care of the land; better serving land ownership and the ALC’s mandate.   


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