If you think drought, BSE and ongoing trade disputes have wreaked economic havoc on Alberta's agricultural food producers, hang onto your John Deere cap.

The worst may be yet to come.

Leigh Christensen, who farms 1,800 acres of land near Standard, east of Calgary, is convinced he's part of an expanding cohort of Alberta farmers that hasn't yet registered on any policy- maker's demographic map. And that's a tragedy in itself, since this group's experiences are apt to have a major impact on land prices - and could greatly complicate succession for the next generation of Alberta farmers.

Christensen has a letter saying his lender won't advance funds against a particular piece of farmland unless it meets certain environmental assessments, assessments Christensen doesn't want to pay for - and isn't convinced the land can meet at this point in time. Without changes to the situation, he says, "forty-five per cent of my assets right now are de-mortgageable - and it falls into a grey area legally."

Photo courtesy LaFonte Consulting Services
Oil operations can contaminate farm land and affect attempts by farmers to get bank loans.

It's a grey area because the lenders aren't worried about what Christensen is doing on that land. Instead, they're concerned about the long-term environmental implications of what his tenants, denizens of the oil and gas industry, are doing.

Want one more plot twist? The lessees aren't doing anything that's illegal; at least, not in Alberta, says Norma LaFonte, an acreage owner-turned farmer's advocate whose thriving Strathmore-based consulting practice helps farmers such as Christensen negotiate better deals with oil and gas companies. "I haven't had to solicit work at all. I can't even return phone calls."

LaFonte admits provincial legislation pretty much tells landowners they have to let these tenants on to their land. That same legislation tells natural resource companies they don't have to tell landowners what they're doing on their land. They don't even have to tell landowners about environmental disasters, including oil spills that might contaminate a farm's greatest natural assets: Soil and groundwater, says LaFonte.

(These must be reported, but not necessarily to the landowner.)

One of her clients has land contaminated by an oil spill - and two letters from different banks saying they won't lend him money with that land as collateral until it's been cleaned up.

Adding salt to the wound, "neither the Energy Utilities Board (EUB) nor the company will keep (him) informed about what's going on (even though he can see reclamation work is under way)," says LaFonte.

She's seen other lender letters to farmers saying the landowners are responsible, in perpetuity, for any environmental issues on their land. To LaFonte, that's like saying you have to let the companies on your land, then pay to keep them.

Alberta Environment spokesman Robert Moyles admits there may be some confusion over communication regarding reclamation. Companies are required to provide landowners with specific information before a reclamation is certified complete. During the cleanup, "we would encourage all companies to be as upfront as possible with the landowners," says Moyles, although there's no legislation to ensure that happens.

That's not good enough, insists David Swann, Calgary Mountainview MLA and the environment critic for the Alberta Liberals.

He's convinced the current process is so skewed in favour of resource companies "it's going to cause increased litigation, it's going to cause increasing social disruption."

Agricultural output and land value should be included in discussions of long-term sustainability, adds Swann.

"We have to be looking generations ahead."

Current frustrations aside, Swann stops short of blaming Alberta Environment staff. Instead, he takes issue with legislation that allows companies to keep paying a static lease rate for resource sites that haven't produced oil or gas for several decades (a policy that negates reclamation since the site has not been "abandoned"). He also questions legislation that requires visual inspections of reclamations on only 10 per cent of sites that have been certified as reclaimed, a statistic he calls "shocking."

Even so, "we're not blaming the department here. We're recognizing that they are extremely short-staffed."

LaFonte applies the same concern to the EUB, an organization she describes as full of "good people trying to do a good job," with too few people.

EUB spokesman Bob Curran says he can't comment on reclamation issues since they're an Alberta Environment responsibility. "If we had a role, then we would respond, but we don't."

He also says the EUB works under strict guidelines when a site is "'abandoned" and what needs to happen at that time. Unless those conditions are met, the EUB doesn't determine what constitutes abandonment.

As for the mortgage issues, "that's a problem with the banks," says Curran. When it comes to spills or reclamation, Alberta legislation clearly states the company involved "is liable for that cleanup, not the landowner."

David Pryce, vice-president of Western Canada operations for the Canadian Association of Petroleum Producers (CAPP), says he's heard about letters some farmers have received from their lenders. CAPP is working to "make sure the banking community understands where the liability lands," he adds.

Christensen, however, says he feels "like I'm in a glass jar, screaming.”

He says he knows the law says he's not fiscally liable for any environmental cleanup. But he also knows whose name is on the mortgage documents.

Given a decade of concern regarding soil sterilization and weed issues related to resource operations on his own land, Christensen says he doesn't believe his land can pass a Phase I environmental assessment, let alone a Phase II. According to the letter from his banker, those assessments must "indicate no concerns (before the bank) would lend funds using this land as security."

With resource operations ongoing, reclamation of this particular parcel doesn't even appear to be an option, he adds.

Daryl Bennett's concerns are even more immediate. A fifth-generation farmer with 11 active wells on 1,200 acres of irrigated land in the Taber area, Bennett's dad is ready to retire and needs some cash to live on.

Knowing European farmers are in the area to buy land in a region renowned for its potatoes and sugar beets, Bennett started talking to real estate agents. He's been told their land is worth $200 an acre less than neighbours who don't have so many wells. (Ten of their 11 wells are on one section, or 640 acres of land. For an image of what that looks like, image 40 wells atop Calgary's Nose Hill Park.)

Real estate agents discounted the land price because there's no room for a new farm family to build a home or the buildings they'd need to sustain a business producing some of Alberta's highest-paying crops. "You can't build on top of a well, even if it's abandoned," says Bennett.

He's heard the province may bump the number of allowed well sites to one for every five acres (128 per section of land). He wonders what that land will be good for when the resource companies pull out - and who will mortgage it, even if a farmer wants to produce food among the wells.

It's enough to make your head spin, admits Scott Elias, who farms in the Standard area. Right now, he's mostly concerned about a noisy gas compressor that's 300 metres from his home. It's currently shut off, but Elias worries that won't last.

Like Bennett and Christensen, he says he's likely through dealing with resource companies on his own. (And the process can be intimidating. LaFonte once had nine oil company employees show up at her acreage to talk about her concerns with plans to drill a well on the neighbour's property.)

Down the road, says Elias, "I will probably give somebody a call and see if I can arrange for a person to be with me when I do meet with the oil company."

Christensen thinks that's a good idea and he wants other landowners to take similar steps and to start sharing more information about landowner rights. In many ways, his is the voice of experience, since his family has had oil companies on their land for more than 40 years. That's four decades with little evidence to support the idea the companies eventually clean up their sites and move on with no lasting impact to landowners, says Christensen.

A college-educated farmer, Christensen says he regrets those who dismiss his concerns in terms of dollar signs. Insisting he's not anti-resource development, Christensen says he knows Alberta's economic strength is powered by oil and gas revenues and that a lot of farmers are justifiably grateful for the chance to use resource money to fuel their businesses.

He's also come across some companies that do an excellent job with lease management and site reclamation, and he's familiar with CAPP's efforts to strengthen communication among various stakeholders - and how that organization, whose members represent virtually all of the oil and gas investment activity in Western Canada, encourages members to act responsibly.

What he seeks is some legislative recognition of the darker side to Alberta's economic success. Since the price for accessing a farmer's private land hasn't risen in 20-plus years, fair compensation is an issue, perhaps especially in cases where there is a dispute over a site's lasting impact on the land use and value.

But the real issue is sustainability, insists Christensen, who is skeptical of any legislation that lets resource companies police their own reclamations.

According to Alberta Environment's Moyles, reclamations require independent certification when complete. He concedes, however, the law doesn't yet stipulate the credentials of those signing those certificates.

Which brings us back to the farm. Like many farmers in Alberta, Christensen is working on an environmental farm plan (EFP) for his own business. EFPs are voluntary (but "encouraged") and they exist to help farmers be more accountable for how their farm operations affect the larger environment.

Christensen, who adopted soil conservation tillage practices seven years ago, is convinced science can help him protect the health of his land. He's also convinced oil and gas companies could do a better job with environmental mitigation and, where accidents occur, environmental amelioration. If it takes new laws to do that, Christensen's on board.

As far as he's concerned, the whole discussion shakes down to one single point: Once you know how to do a better job, you are obligated to do a better job.

Still holding his Dear Mr. Christensen letter from the bank and looking ahead to the rest of 2006, he hopes other Albertans will agree.

(Joy Gregory can be reached at joy@businessedge.ca)