The skyrocketing value of Metro Vancouver real estate is driving up the cost of locally grown fruits and vegetables, according to a new report from Vancity credit union.

According to the report's co-author Brent Mansfield, many non-farmers are buying up small farms between five and 20 acres in size to take advantage of tax breaks and turn them in to country estates with limited actual farming.

In addition, Mansfield believes 35 per cent of the leased farmland in the region is now owned by businesses that appear to be holding companies for developers, which often have terms such as holding, investment, estate, property, land or development in their name.

"While only a small number of landowner applications for removal of farmland from the ALR are successful, the hope of success may still encourage speculation and be a factor affecting the price of larger parcels of farmland," notes the report.

As a result, despite the protections provided by the Agricultural Land Reserve, one third of the land being farmed in Metro Vancouver is now leased by farmers from non-farmers, according to the report Home on the Range: cost pressures and the price of farmland in Metro Vancouver.

Not financially viable

The report found farmland in Metro Vancouver costs from about $110,000 to $350,000 per acre for parcels up to 20 acres in size.

But farming is not financially viable in B.C. where land prices are higher than $80,000 per acre, according to the report.

"The price of small farms is actually above what is economically viable for most businesses to do," says Mansfield, and as a result he says farmers have to raise their produce prices to make the business work.

"We're kind of predicting 25 to 50 per cent food price increases, specifically look at fruits and vegetables," he says.

The report notes the price of fresh vegetables has risen 26 per cent and fresh fruit has risen nine per cent between January 2015 and January 2016.

Mansfield says in order to keep farming sustainable in the region, more needs to be done to protect agricultural land.

"A robust local food system requires protecting agricultural land and ensuring it's actively farmed. The high price of agricultural land is a major threat to the viability of farming in the region. Speculation and other pressures need to be addressed," he says.

With files from Kamil Karamali