cropland-out-of-production-agreements

Cropland out of production compensation agreements (subset of infrastructure acquisition capabilities). This skill analyzes ONGOING AGRICULTURAL IMPACTS and annual compensation structures - NOT initial easement valuation or one-time acquisition payments.

Complete Out of Production

Tower/structure footprint: Land physically occupied by structure where NO farming possible

Typical areas:

• 69kV H-frame tower: 15-20 m² footprint (150-200 sf)
• 115kV H-frame tower: 20-30 m² footprint (200-300 sf)
• 230kV lattice tower: 40-60 m² footprint (400-600 sf)
• 500kV lattice tower: 80-120 m² footprint (800-1,200 sf)

Example:

• 230kV transmission line: 12 towers across 100-acre farm
• Complete out of production: 12 × 50 m² = 600 m² = 0.15 acres (direct tower footprint)

Partial Out of Production (Operational Inefficiency)

Internal headlands: Turning space required around each tower

Headland calculation:

• Standard headland: 6-12 meters around tower (equipment turning radius)
• Precision agriculture: Additional 3-5 meters (GPS accuracy, spray overlap)
• Typical impact per tower: 20-30 meter diameter circle = 300-700 m² lost productivity

Example:

• 100-acre farm, 12 towers, 25m diameter headlands per tower
• Partial out of production: 12 × 490 m² = 5,880 m² = 1.45 acres
• Total impact: 0.15 acres complete + 1.45 acres partial = 1.6 acres (1.6% of farm)

Right-of-Way Operational Restrictions

Activities restricted within ROW (even where farming continues):

Aerial spraying limitations:

• Prohibited within 15-30 meters of conductors (conductor height dependent)
• Impact: Must ground-spray ROW (10× cost, 3× time vs. aerial)

Example:

• 500kV line, 80m ROW width, 1 km crossing
• ROW area: 80m × 1,000m = 8 hectares
• Aerial spray prohibited: Must ground-spray 8 hectares annually
• Cost differential: $50/ha aerial vs. $500/ha ground = $450/ha × 8 ha = $3,600/year ongoing

Irrigation system restrictions:

• Pivot irrigation cannot cross conductors (height clearance)
• Impact: Must switch to linear move (higher capital cost, lower efficiency)

Example:

• Center pivot irrigation, 500kV line bisects field
• Solution: Convert to linear move system ($120,000 capital cost, 15% lower efficiency)
• Ongoing loss: 15% yield reduction on 40-acre field = 6 acres lost production annually

Precision agriculture interference:

• GPS signal distortion near high-voltage conductors
• Auto-steer malfunction zones: 10-20 meters either side of conductors
• Impact: Manual steering required in ROW (slower, less precise, overlapping inputs)

Example:

• 500kV line, 80m ROW, GPS interference zone 100m total width
• Impact on 640-acre farm: 10 hectares require manual steering (5% slower planting/harvest)
• Timeliness loss: 1-day delay in planting = 1-2% yield reduction (weather-dependent optimal window)

Ontario Model (Hydro One - Current Practice)

One-time easement payment: Market value of easement (typically 10-25% of fee simple value per easement-valuation-methods skill)

Theoretical potential profit loss (6-year period):

• Calculation: (Land value before - Land value after) + Crop costs + Ongoing impact injury
• Payment: Lump sum at easement grant
• Duration: 6 years of theoretical loss only

Example:

• Easement: 2 hectares agricultural land, $30,000/hectare fee simple value
• Easement value: 15% × 2 ha × $30,000 = $9,000 one-time
• Theoretical profit loss: 6 years × 2 ha × $500/ha net income = $6,000
• Total compensation: $15,000 (paid once, covers 6 years theoretical loss)
• After year 6: NO ongoing compensation despite ongoing impacts

What is NOT covered:

• Annual expenses after year 6 (internal headlands, labor, weed control)
• Increased equipment operating costs (farming around towers for 50+ year lifespan)
• Productivity loss from operational inefficiencies (aerial spray restrictions, irrigation limits)
• Risk of equipment damage (collision with guy wires, anchor points)

Alberta Model (ATCO Electric - Surface Rights Board)

Per-structure annual compensation (awarded in addition to one-time easement payment):

2021 rates (Hart v ATCO Electric Ltd):

• $1,380/year per structure on cultivated lands
• $552/year per structure on uncultivated lands
• $690/year per structure on headlands

Annual payment: Paid every year for life of structure (50-80 years typical transmission line lifespan)

Compensation review: 5-year intervals from effective date (landowner can request rate adjustment)

Example:

• 230kV transmission line, 12 towers on 100-acre farm
• Classification: 10 towers cultivated, 2 towers headlands
• Annual compensation: (10 × $1,380) + (2 × $690) = $15,180/year
• Present value (50-year lifespan, 5% discount): $15,180 × 18.26 = $277,187
• Comparison to Ontario model: $277,187 (Alberta) vs. $15,000 (Ontario) - 18× higher

Additional one-time payments (Alberta):

• Initial easement payment: $1,300/acre (land value impact)
• Quarter section signing bonus: $7,500 (incentive to avoid Surface Rights Board hearing)
• Early Resolution Access Agreement (ERAA): $10,000 (voluntary early agreement incentive)

Total Alberta compensation example:

• One-time: (2 acres × $1,300) + $7,500 + $10,000 = $20,100
• Annual: $15,180/year for 50 years (NPV $277,187)
• Total compensation: $297,287 vs. Ontario $15,000 (20× higher)

OFA Advocacy Position (83% Support)

OFA Resolution (November 2024 AGM): Lobby Hydro One Networks Inc. to provide annual compensation for private landowners with power lines crossing land

Rationale:

• Ongoing burden: Farmers "continue to farm around and maintain the towers" for decades after construction
• Uncompensated expenses: Internal headlands, labor increases, productivity impacts, weed control, equipment damage risk
• Inequity: Alberta farmers receive annual compensation, Ontario farmers do not
• Precedent: Natural gas pipelines in Ontario pay annual compensation (Enbridge, TCPL)

OFA recommendation: Adopt Alberta Surface Rights Board per-structure annual payment model

Internal Headlands Loss

Definition: Turning space required around each tower where farming continues but productivity reduced

Quantification:

• Headland area: πr² where r = equipment turning radius (12-15 meters typical)
• Productivity loss: 30-50% (can farm, but inefficient - point rows, irregular passes, overlapping inputs)
• Crop value loss: Headland area × productivity loss % × crop net income/hectare

Example:

• 12 towers, 15m radius headlands
• Headland area: 12 × π(15²) = 8,482 m² = 2.1 acres
• Productivity loss: 40% (can farm, but inefficient)
• Crop net income: $600/acre
• Annual loss: 2.1 acres × 40% × $600 = $504/year ongoing

Labor and Time Increases

Additional time farming around towers:

• Planting/harvest: 10-15% slower (stopping, maneuvering, manual steering near conductors)
• Spraying: 20-30% slower (ground application instead of aerial, or manual steering)
• Tillage: 5-10% slower (avoiding guy wires, anchor points)

Opportunity cost:

• Weather-sensitive windows: 1-day delay in planting = 1-2% yield loss (optimal planting window narrow)
• Harvest delays: 1-day delay in harvest = 0.5-1% quality reduction (moisture content, weather damage risk)

Example:

• 100-acre corn, 12 towers, 10% slower planting
• Normal planting time: 8 hours (12.5 acres/hour)
• With towers: 8.8 hours (additional 0.8 hours = $40 labor cost)
• Weather delay: 1 day lost to rain during extended planting = 1.5% yield loss
• Yield loss: 100 acres × 180 bu/acre × 1.5% × $6/bu = $1,620 (one-time, weather-dependent)
• Annual risk: Probability of weather delay increases with longer planting window

Precision Agriculture Restrictions

GPS signal interference:

• Interference zone: 10-20 meters either side of high-voltage conductors
• Auto-steer malfunction: Must manual-steer in interference zone (slower, less precise)
• Input overlapping: Manual steering = 5-10% overlap (seed, fertilizer, pesticide wasted)

Example:

• 500kV line, 100m interference zone, 1 km crossing
• Interference area: 100m × 1,000m = 10 hectares
• Overlapping inputs: 7% overlap (manual steering imprecision)
• Seed cost: $400/ha, fertilizer $250/ha, pesticide $150/ha = $800/ha total inputs
• Wasted inputs: 10 ha × $800/ha × 7% = $560/year ongoing

Weed Control Expenses

Tower footprint weed reservoir:

• Cannot spray within 2-3 meters of tower legs (equipment damage risk, guy wire entanglement)
• Manual weed control required: Hand-spraying or mowing
• Cost differential: $50/tower/year manual control vs. $0 if field-sprayed

Example:

• 12 towers, $50/tower manual weed control
• Annual expense: 12 × $50 = $600/year ongoing

Weed seed spread:

• Tower footprint uncontrolled weeds: Seed spread to surrounding field
• Increased herbicide costs: Additional applications to control weed pressure from tower areas
• Resistance development: Uncontrolled weeds = selection pressure for herbicide-resistant biotypes

Equipment Damage Risk

Collision hazards:

• Guy wires: Low-visibility cables extending from tower (especially at night, dusty conditions)
• Anchor points: Ground-level concrete blocks, screw anchors (below crop canopy, not visible)
• Tower legs: H-frame legs in field (equipment must avoid)

Damage costs:

• Minor collision: Bent implement, $500-$2,000 repair
• Major collision: Combine header damage, $10,000-$50,000 repair
• Probability: 1-5% annual risk per tower (depends on operator experience, visibility, field conditions)

Example:

• 12 towers, 2% annual collision risk per tower, average damage $5,000
• Expected annual cost: 12 × 2% × $5,000 = $1,200/year
• Risk mitigation: High-visibility markers on guy wires ($100/tower one-time) reduces risk 50%

OFA Factsheets (Key Resources)

"Cropland out of production in a right-of-way, lease or easement agreement" (May 9, 2024):

• Addresses compensation for agricultural land affected by transmission infrastructure
• Guidance on easement vs. lease arrangements
• Ongoing impact considerations

"Land Easements and Acquisitions Under Infrastructure Projects" (revised May 2025):

• Comprehensive guide to infrastructure easement agreements
• Farm operation concerns through all project stages (planning, construction, operation, decommissioning)
• Compensation practices developed with Hydro One

OFA Webinar: Easements on Farm Properties (April 2024):

• Educational session on easement agreements
• Negotiation strategies for farmers
• Legal considerations

OFA Recommendations for Affected Landowners

1. Thorough review of Land Agent materials:

• Understand all terms (easement vs. lease, perpetual vs. term, compensation structure)
• Identify what is NOT covered by one-time payment (ongoing impacts, future landowners)
• Question theoretical profit loss calculations (are they realistic for YOUR farm operation?)

2. Legal review by land expertise lawyer:

• OFA recommends lawyers with expertise in land issues (NOT general practice lawyers)
• Key provisions to negotiate: compensation structure, annual payments, review intervals, decommissioning obligations
• Resources: Law Society of Ontario Referral Service, Ontario Bar Association directories

3. Consider all project stages:

• Planning: Impact on farm succession plans, financing (easement = encumbrance, may affect lending)
• Construction: Access routes, crop damage, soil compaction, tile drainage damage, temporary fencing
• Operation: Ongoing impacts (discussed above - headlands, labor, restrictions)
• Decommissioning: Who pays for tower removal? Land restoration obligations?

4. Document existing conditions:

• Pre-construction survey: Soil quality, tile drainage locations, crop yields (baseline for damage claims)
• Photographic evidence: Field conditions before construction
• Yield maps: Precision agriculture data showing productivity before easement (proves loss if disputed)

Compensation Negotiation Strategies

Distinguish one-time vs. ongoing compensation:

• One-time: Easement value, construction damage, tile drainage repair (capitalize and pay upfront)
• Ongoing: Annual productivity loss, operational inefficiencies, labor increases (annual payments for life of structure)

Example negotiation position:

• One-time easement payment: $9,000 (15% of fee simple value, 2 hectares)
• Construction damage: $8,000 (soil compaction remediation, crop loss, tile drainage repair)
• Annual ongoing compensation: $1,500/year per tower × 12 towers = $18,000/year (based on Alberta model)
• Total ask: $17,000 one-time + $18,000/year annual

Benchmark to Alberta Surface Rights Board rates:

• Cultivated lands: $1,380/structure/year (2021 rate, indexed annually)
• Uncultivated lands: $552/structure/year
• Headlands: $690/structure/year
• Rationale: "Alberta farmers receive annual compensation for identical impacts - equity requires Ontario farmers receive same"

Benchmark to Ontario natural gas pipelines:

• Enbridge, TransCanada: Pay annual right-of-way compensation to Ontario landowners
• Precedent: Linear infrastructure in Ontario DOES pay annual compensation (not unique to Alberta)
• Rationale: "Gas pipelines pay annually, electricity transmission should too"

Request compensation review intervals:

• Alberta model: 5-year review from effective date
• Rationale: Farming costs increase (inflation, input costs), compensation should keep pace
• Mechanism: CPI indexing, or 5-year renegotiation clause

Quantify ALL ongoing impacts (use examples above):

• Internal headlands loss: $504/year
• Labor increases: $40/year + weather delay risk
• Precision agriculture restrictions: $560/year
• Weed control expenses: $600/year
• Equipment damage risk: $1,200/year expected value
• Total ongoing impacts: $2,904/year (conservative estimate, one farm)
• Multiply by number of towers: 12 towers = $34,848/year ongoing loss

Common Pitfalls to Avoid

Accepting "industry standard" one-time payment without questioning:

• "Industry standard" = Ontario Hydro One practice (6-year theoretical profit loss)
• Counter: "Alberta industry standard is annual per-structure payments - why doesn't Ontario match?"

Signing early without legal review (even with "incentive bonuses"):

• ATCO offers $10,000 Early Resolution Access Agreement (ERAA) to bypass Surface Rights Board
• Risk: $10,000 bonus vs. $277,187 NPV annual compensation (example above) - trading $10K for $270K

Failing to document baseline conditions:

• Without pre-construction yield data, cannot prove productivity loss later
• Mitigation: Yield maps, soil tests, tile drainage survey BEFORE construction

Not considering future landowners:

• Easement is perpetual (or 50+ year term) - you may sell farm, but easement remains
• One-time compensation to YOU does NOT compensate future buyer for ongoing impacts
• Impact on farm value: Buyers discount for encumbered land (may lose $50,000-$100,000 sale price)

Example 1: Ontario Cash Crop Farm (Current Hydro One Practice)

Farm: 250 acres, cash crop (corn/soybeans rotation), $35,000/acre land value

Infrastructure: 500kV Hydro One transmission line, 16 towers, 80m ROW width, 2 km crossing

Compensation received (Hydro One one-time payment):

• Easement: 4 acres tower footprints × 15% fee simple × $35,000/acre = $21,000
• Theoretical profit loss: 6 years × 4 acres × $500/acre = $12,000
• Total: $33,000 one-time payment

Ongoing impacts NOT compensated (annual, 50-year lifespan):

• Internal headlands: 16 towers × 490 m² × 40% productivity loss × $600/acre = $1,900/year
• Aerial spray restrictions: 8 hectares ROW × $450/ha ground spray premium = $3,600/year
• Precision agriculture interference: 10 hectares × $800/ha inputs × 7% overlap = $560/year
• Labor increases: 10% slower planting/harvest, 250 acres × 0.8 hours × $50/hour = $1,000/year
• Weed control: 16 towers × $50/tower = $800/year
• Equipment damage risk: 16 towers × 2% × $5,000 = $1,600/year
• Total ongoing loss: $9,460/year × 50 years = $473,000 NPV @ 5% (18.26 annuity factor)

Farmer's position: Received $33,000, ongoing loss $473,000 NPV - $440,000 shortfall

Example 2: Alberta Grain Farm (ATCO Electric Annual Compensation)

Farm: 640 acres (quarter section), grain farm (wheat/canola), $25,000/acre land value

Infrastructure: 230kV ATCO transmission line, 8 towers, 45m ROW width, 1.5 km crossing

Compensation received:

• One-time:

- Easement: 1.5 acres × $1,300/acre = $1,950

- Quarter section bonus: $7,500

- ERAA incentive: $10,000

- Total one-time: $19,450

• Annual (2021 rates):

- 6 towers cultivated × $1,380 = $8,280

- 2 towers headlands × $690 = $1,380

- Total annual: $9,660/year

- NPV 50 years: $9,660 × 18.26 = $176,412

Total compensation: $19,450 + $176,412 = $195,862

Comparison to Ontario model: $195,862 (Alberta) vs. $33,000 (Ontario example 1) - 6× higher

Example 3: Multi-Generational Farm (Succession Impact)

Farm: 400 acres, family farm (3rd generation), father age 68 planning retirement

Infrastructure: 500kV transmission line approved, 12 towers proposed

Compensation offer (Hydro One): $42,000 one-time payment

Son's analysis (taking over farm):

• Father receives: $42,000 (retires, moves to town)
• Son inherits: 400-acre farm with 12 transmission towers (perpetual easement)
• Son's ongoing impacts: $12,000/year annual loss (labor, productivity, restrictions)
• Son's 40-year farming career: $12,000 × 40 years = $480,000 loss (nominal dollars)
• Son did NOT receive compensation: Father received one-time payment, son bears ongoing costs

Negotiation strategy:

• Request annual compensation paid to current landowner (transfers to future owners via easement assignment)
• Rationale: "Easement is perpetual, impacts are perpetual, compensation should be perpetual"
• Alternative: Capitalize 40-year annual compensation ($12,000 × 15.05 annuity factor = $180,600) and add to one-time payment
• Revised ask: $42,000 + $180,600 = $222,600 one-time, OR $42,000 one-time + $12,000/year annual

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This skill activates when you:

• Analyze cropland out of production agreements for transmission lines, pipelines, or linear infrastructure
• Compare Ontario one-time compensation vs. Alberta annual compensation models
• Quantify ongoing agricultural impacts (headlands, labor, precision agriculture restrictions, weed control, equipment damage)
• Negotiate right-of-way agreements on behalf of farmers (based on OFA guidance)
• Evaluate fairness of "industry standard" compensation offers
• Calculate present value of annual compensation structures
• Advocate for annual payments based on Alberta Surface Rights Board precedent
• Assess impact of easements on farm succession and future landowner compensation