Rising land prices in Canada are preventing young farmers from accessing the property ladder, according to a report produced by the country’s Senate. And among the factors boosting values, lawmakers pointed to a usual suspect: foreign investors.
Based on interviews with domestic and international stakeholders, the report highlighted global demand for food and aging demographics as reasons why assets are changing hands at an accelerated pace. But its authors also spent time discussing the inflationary effects of purchases by “non-agricultural interests” – which, it said, includes “financial institutions, pension funds, private investment firms and private companies.”
“The main purpose of those funds is not to practice agriculture, but to get a return on the investment,” Charles-Félix Ross, executive director of Québec’s farmers union, is quoted as saying in the report. “[Their] business model is not a model intended to maintain dynamic agriculture in Canada in the future.”
Take it leasy
Industry players also noted the role played by investment funds in pushing a greater proportion of farmland in the rented sector, as assets purchased by financial players are often leased out to operators.
“Stakeholders are concerned about this increase, since this type of ownership makes farmers employees rather than owners and exposes them to additional risks because of rising rents,” the report argued. “They are also concerned about potential changes to the production structure resulting from the loss of family farms and a shift to large-scale farms.”
André Magnan, an associate professor in the department of sociology and social studies at the University of Regina, is quoted as saying that landowners are “investing in their communities” while engaged in agricultural production but investors are “mainly concerned with their return on investment.”
Hold your horses
The Senate’s warnings will worry those who have seen similar instincts translate into restrictions on foreign investment in other parts of the globe, such as Australia. But the report also quoted insiders who are more positive about the role played by investors.
Tom Eisenhauer, president and chief executive of Bonnefield Financial, said that lease-buyback investment can be a way to reduce producers’ debts while keeping their farm operational. Others underlined the role of investors at large in bolstering exports; some downplayed their effects on farmland values.
“From the data that we have to date, foreign ownership does not appear to be a primary driver of increases in farmland values; in particular, it’s less than 2 percent from the first period in which we have been watching the data,” said Norm Letnick, British Columbia’s Minister of Agriculture.
The report concluded with a set of recommendations, among them tax incentives for new farmers and better tracking and classification of farmland transactions. The list did not include, however, explicit measures to curb foreign investment.