In this article, we look at some of the challenges faced by Indigenous farmers and delve into potential solutions when it comes to seeking capital and finding success.
An historical look at Indigenous agriculture
Indigenous communities throughout Canada have long and varying histories with agriculture. Prior to European contact, Indigenous communities engaged in extensive agricultural pursuits, from the cultivation of foods and medicines from the land to more developed ranching and industrial cultivation practices.
Whether it be the development and operation of ranching and farming initiatives, or the leasing of lands to third parties for agricultural purposes, agriculture continues to be a significant source of economic development for First Nations throughout Canada.
Understanding the legal framework
In addition to navigating the rigours of conventional agricultural practices, First Nations have had to work within a complex, multi-faceted and ever-evolving legal framework just to engage in the production, marketing and sales of agricultural goods.
The legal nuances surrounding First Nations agriculture involve issues of land jurisdiction and administration. First Nations leveraging agriculture for economic development must navigate the complexities introduced by over a century of land administration under the Indian Act, including the inalienability of reserve lands.
First Nations land management in Canada has several different applicable regimes. Some Nations are governed by the Indian Act, while others have established their own land codes under the Framework Agreement on First Nation Land Management Act. Further, some Nations take a more sovereigntist approach by refusing to acknowledge or adhere to the jurisdiction of the Indian Act and other federal legislation altogether. While First Nations employ several different legislative and customary mechanisms to regulate their agricultural activities, this article will focus specifically on those lands governed by the Indian Act.
A closer look at the Indian Act
1. The inalienability of reserve lands
Pursuant to section 18 of the Indian Act, reserve lands are set apart for the collective “use and benefit” of a First Nation. First Nations have the right of exclusive use and occupation of their reserve lands, but the legal title remains with the Crown. Reserve lands cannot be transferred, sold, or otherwise surrendered. While this policy was initially introduced to prevent the dispossession of First Nations’ reserve land, it also introduces barriers for Nations looking to leverage their lands for economic development purposes, including agricultural development.
2. Financing challenges for First Nations and on-reserve farmers
Pursuant to section 89 of the Indian Act, reserve land cannot be seized by legal processes or be mortgaged or pledged to non-members of a First Nation. As such, reserve lands cannot be used as collateral when First Nations are securing financing.
Commercial lenders are generally opposed to providing financing involving reserve lands because they are not able to enforce any rights against reserve lands in the event of default. For this reason, it is difficult for Indigenous farmers to access capital for agricultural equipment or to pursue agricultural endeavours in the same way that non-Indigenous farmers can.
Other challenges persist when First Nations seek to lease reserve lands to non-Indigenous farmers. The Indian Act regulates the development, leasing, governance, resources and fiscal management of reserves. Specifically, ss. 28(1) of the Indian Act renders any agreement to use or occupy reserve land void if the same is not approved by the Minister of Indigenous Services Canada. The result is that First Nations and their members cannot lease or permit the use of their farmland to a non-Indigenous farmer without Ministerial approval, making it difficult to profit from agricultural leasing.
The process for approval can be tedious, expensive and time consuming. As a result, First Nations often look to solutions outside of federal legislation to facilitate on-reserve development, such as customary, unwritten land allocations or buckshee leases. In the case of the latter, buckshee leases are often made between a First Nation, or a member of a First Nation, and a party that has not been approved in accordance with the Indian Act.
As such, federal and provincial courts will not enforce buckshee leases simply because they do not carry the security of tenure. Parties do not obtain rights to possession against the First Nation, rather, the lease is continued by the goodwill of the First Nation.
3. Potential solutions for on-reserve farmers seeking capital
The primary legislative tool under the Indian Act for authorizing on-reserve agricultural activities falls under paragraph 58(1)(c), which states the Minister of Indigenous Services Canada may grant, for the benefit of a First Nation, a lease of reserve land for agricultural or grazing purposes. As noted above, securing Ministerial approval is often a bureaucratic, costly endeavour and does not allow for direct negotiations between a First Nation and prospective partners or farming operators. Agricultural leases of reserve land can be used as security for financing, and as such, sub-leases can also be used as collateral for loans.
Eligible Indigenous-owned entities may also use Indigenous Financial Institutions (IFIs). IFIs are autonomous, community-based financial organizations that were created to provide loans to Indigenous enterprises that are unable to secure loans from highly regulated conventional lenders. There are IFIs available specifically for agriculture-specific services and financing that Indigenous farmers may access.
For more information on IFI’s, support for your agricultural endeavours or assistance with determining how the designation process may assist your agriculture and development goals, please reach out to a member of our Indigenous and Agribusiness & Food practice groups.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.
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