How Canada can support Indigenous farm entrepreneurs

Starting a farm business can be tough. Doing so without means of securing financing can make doing so much more difficult.

Why it matters: Canada’s Indigenous communities are well-positioned to have a significant positive impact on the agriculture sector, but need better access to funding. Providing better access to financing – while recognizing how such communities were pressured out of the sector historically – could help achieve this.

Many Canadian Indigenous communities face such a challenge, thanks to the structure of Canada’s reserve system, and the systemic disenfranchisement historically inherent in that system.

Creativity in lending, however, can bring opportunities.

This is the position of Tatum Claypool, a Métis woman from North Battleford, Saskatchewan, and senior relationship manager with Farm Credit Canada’s Indigenous financing team. She’s also a 2024 Nuffield scholar investigating how other countries have found ways of supporting Indigenous individuals and communities in developing agricultural enterprises.

For Claypool, Canada’s Indigenous communities are a relatively untapped resource when it comes to agricultural economic development. With favourable age demographics and a strong cultural connection with the land and agricultural production, developing farm and food enterprises would be a boon for communities where economic opportunities are few, as well as for Canadian agriculture as a whole

Problematic Indian Act

Understanding why Canada’s Indigenous communities have greater difficulty starting or growing agricultural businesses necessitates understanding the Indian Act – legislation from 1876 which established Canada’s reserve system.

Claypool says the act states that land is designated for the local community in perpetuity, although formal ownership rests with the Crown. This means community members cannot draw on the land as collateral to secure financing.

Echoing sentiments expressed by Indigenous entrepreneurs at the most recent Future of Food Conference, Claypool says lending systems based on collateral, and the perception of higher risk in the absence of traditional forms of collateral, put Indigenous businesses in a bind.

“Right now, on-reserve lending is restricted by the Indian Act, Section 89, which restricts the ability to take collateral. We specialize in helping individuals navigate the Indian Act in agriculture,” she says, in reference to FCC’s wider Indigenous financing team.

“Personal property collateral is protected under Section 89 from seizure. So basically, it’s really hard to get credit when you can’t offer what you’re buying as collateral. When people ask why the Indigenous team is different from conventional lending – we don’t have a base that’s accumulated equity that we can use against loans. How do you ever build generational wealth if you can’t use that tangible asset in agriculture…You want to get a credit bureau score, but you can’t get a loan. But you can’t get a loan, because you can’t get a credit bureau score. How do you grow a business within these confines?”

Workarounds are possible, though. If an individual wants to purchase or expand their beef herd, for example, they might be able to have a loan guaranteed by their community band. FCC has also expanded loan eligibility criteria to include the harvesting of wild plants and herbs, an activity not previously considered a form of agricultural production.

Intentionally systemic barriers

The Indian Act is only one of several systemic barriers which have long suppressed indigenous farm entrepreneurs. Another one, the now-infamous “Pass system” established in the decade following The Indian Act, added severe logistical challenges.

Designed to enable the government to keep tabs on the movement of Indigenous people, community members required formal permission from the area’s Indian agent (an on-the-ground representative of the federal government) to leave the reserve or engage in commerce. If the agent was slow to grant that permission or otherwise did not think it was appropriate for the individual to go, the person was legally prohibited from leaving.

“You weren’t able to access the market with the pass and permit system, let alone the cultural stuff and all the other restrictions. How are you supposed to get your business going when today is the cattle sale, and you can’t get off the community to go do it?” says Claypool.

“If you bought from an Indigenous farmer who didn’t have that pass or permit, you got fined too. These were systematic exclusions from the market.”

Despite suppressed freedom of movement, Claypool says many Indigenous farmers still managed to do pretty well – a result of long-held cultural knowledge rooted in living and working on the land. Unfortunately, that success also proved too much for the governing authorities to bear. In 1889 the Peasant Farm Policy was enacted, which restricted Indigenous farmers from using all but the most rudimentary agricultural tools.

“You go from having a hay rake, whether it was horse-powered or however it was powered, back to a scythe,” says Claypool. She adds these kinds of restrictions on individual freedom, and the ability to conduct one’s own business, are not always common knowledge across Canada’s non-Indigenous demographics.

“Read the Indian Act as a farmer, and imagine those restrictions on you. How would you have felt?”

A resurgence

Past misdeeds and the impacts of such government policies reverberate in the present day. Despite it all, Claypool says there is strong and ever-growing interest in the agriculture and food sector among Canada’s Indigenous peoples. She hopes her Nuffield scholarship study subject – the resurgence of Indigenous people in agriculture – can help inform how Canada can better foster that interest and enable entrepreneurs to succeed.

“I want to see how other areas of the world have done this – to help Indigenous people start back into agriculture for economic prosperity, knowledge capacity, work on reserve so community members can stay on reserve and earn a living wage while tending to their land the way they culturally have always tended to their land,” says Claypool.

“How are people navigating their systematic barriers? Creating business structures, finding financial institutions and supports toward ag operations, food sovereignty projects and other things that have engaged the community back into agriculture?”