Private or foreign farmland ownership has long been an emotive topic. I’ve written frequently about this in the context of Australia, where once again emotions are running high following the government’s recent lowering of the threshold to review land purchases by foreign investors.
This week, though, I thought it worth highlighting the debate that’s emerging in another part of the world: Canada.
The agriculture-heavy province of Saskatchewan is now reviewing regulation surrounding institutional investment into its farmland. One of the review’s targets is the $119bn Canada Pension Plan Investment Board (CPPIB), which has faced complaints its land purchases will squeeze local farming businesses on land values. (To date, CPPIB has made just one $120 million farmland investment in the province.)
A spokesperson at CPPIB was even moved to “set the record straight” in local newspaper Leader-Post last week after several scathing reports. (The fund’s official line is still no comment.)
“CPPIB is a patient, responsible, long-term investor,” wrote Michel Leduc, senior managing director in the public affairs department. “We do not plan to amass huge individual holdings of farmland, or to squeeze out returns. We will make reasonable investments to improve farms and help those farmers who choose to partner with us to compete.”
Leduc also pointed out, and I think this needs reiterating, that institutional investment still accounts for “a tiny sliver” of Saskatchewan farmland transactions – “if we bring our investments in Saskatchewan farmland up to $500 million over the next five or six years, we would still constitute less than one per cent of the market”, he wrote. Local farmers and agribusinesses are far more likely to compete on farmland sales, which is the case in many other markets such as Australia too.
While most people in the industry, myself included, would agree that sensible regulation, governance and transparency is needed, it would be a shame to see places like Saskatchewan over-regulate and exclude big and stable sources of private, institutional capital before any benefits, or disadvantages, of private ownership can be evidenced or measured.
The length of time it has taken some agriculture projects to raise capital and get off the ground in recent years just proves the massive funding gap that exists. And I don’t need to remind you of the pressure on global food supply presented by an increasing global population or the generational shift occurring in the agriculture sector.
Still, there’s clearly work to be done in the court of public opinion, so that CPPIB and others aren’t framed as irresponsible land stewards, but rather welcomed by the farming communities in which they invest. As many of you often tell me, agri investment is a local business. Good relationships with local operators, land-owning neighbours and other local stakeholders, are key for success.