Here’s a fact about farming: just shy of 40 per cent of all Canadian farmland is rented, either from the government, or, more commonly, from landlords. It can be tough to get into farming – land prices are high (they’re not making that stuff anymore) – and for many, it’s the only way it can practically be done.
“Most Canadians don’t know it’s going on, but within the farming community, it’s absolutely essential,” says Shannon Veurink, a farmer from Hagersville, Ont., south of Hamilton, who’s one of the co-founders of a service that uses an innovative bidding mechanism to make a tricky process possible.
Renting farmland isn’t as simple as posting a notice with a figure attached to it. For farmers, land rental is a huge commitment fraught with many unknowns. In the first place, it can be difficult for a landlord to tell how much they should be charging for their land.
“The number one question when we talk to landowners is: What is my farmland worth?” says Ms. Veurink.
Valuing farmland is always a challenge, because the prices of the commodities that those lands produce are always in flux. What’s more, different tenants will get different results from the same plot of land, depending on how they’re using it, and how efficient they are. That section of Saskatchewan prairie will be worth more in the hands of an experienced grain farmer than an entrepreneur with ideas about rows of exotic novelty cabbages. And without knowing the land’s value, the landlord who posts an ad doesn’t know that if he accepts an offer, that the phone won’t ring five minutes later with a much better offer he’ll be missing out on.
So Ms. Veurink, along with her husband Kevin, and his brother and sister, who themselves run a farm that’s partially on rented land, saw an opportunity. The service they’ve developed – and which got funded as a winner on the CBC’s Dragons’ Den – is a land-rental marketplace called RentThisLand.com, and lets landlords and renters work out a deal, without throwing them into an open auction.
It goes like this: Landlords and tenants (or, for these purposes, “farmers”), create profiles on the site. Landlords put up a listing for their land, specifying what they’re offering and what they’re looking for in a farmer. Like a dating website, the process is anonymous and farmers and landowners can’t contact each other directly. The listing only stays live for a finite amount of time, much like an auction period. While the listing is open, farmers can ask questions, which (after being moderated) are posted to a public message board. They can also put in bids, specifying the all-important price-per-acre they’re willing to pay.
Unlike an auction, there’s no reserve price and the landlord isn’t obliged to rent to the highest bidder. (Maybe it’s a bad fit. Maybe it’s someone they just plain don’t like.) Only when the listing period ends (or at least five bids have come in, whichever comes first) is the landlord shown the average price that that bidders are willing to pay for their land.
Then the landlord has a choice to make: Knowing the average that people are offering, the landlord can either cancel the whole listing and walk away scot-free. But if they choose to move to the next step, and review the specific names, profiles, and prices of bidders, they’re committing to either choose one of the offers or pay RentThisLand’s 1.5 per cent service fee from their own pockets.
Ms. Veurink says the system was designed to simultaneously safeguard everybody’s interests – the landlord, the farmer, and the site itself. For tenants, if offers a wide marketplace to shop in, and a way to do due diligence in public. For landlords – who range from farmers to investors to people who’ve inherited a family farm but might not want to work it themselves – the site is designed to “pause the process” of “instead of the landowner facing that pressure of people calling, they can list the land, review all offers that come through, and from these offers get a good feel for what their land is worth,” says Ms. Veurink. “It’s not an auction by any means, but it still allows the price exploration, and allows the landowner to make an informed decision about who they rent to.”
The site was designed by its four founders, who remain active in farming, and developed by developers in nearby Brantford. The four split the workload, with Ms. Veurink handling the day to day management (“Technically I’m the president but we’re way too flat for that to have any meaning.”) The site went live in early 2013, and has attracted about 1,700 farmers and 300 landlords – and the exposure from the Dragons’ Den success doesn’t hurt, either. For all that, Ms. Veurink doesn’t see her family leaving their land anytime soon.
“I think the boys are farmers. That’s who they are. They’ll never let go of it, but they’re passionate about this too,” she says. “They’re innovators. If there’s technology in farming to be explored, they’re all over it.”