

Farmland investment managers have hit back at claims that financial investors are responsible for pushing up the price of Saskatchewan farmland after the Saskatchewan government initiated a review of the province’s farmland ownership rules.
Canada Pension Plan Investment Board’s C$128 million ($108 million; €92 million) acquisition of 115,000 hectares of Saskatchewan farmland at the end of 2013 was the subject of many complaints from farmers and politicians, encouraging the government to start the review.
There are also allegations that foreign investors are accessing the state’s farmland market illegally through complicated investment structures, contributing to overheating of a farmland market that has doubled in value in the last five years.
“The Government of Saskatchewan will be reviewing options to amend the legislation and/or the regulations to clarify what entities are eligible to own farm land in Saskatchewan,” Mark Folk, general manager at the Farm Land Review Board (FLRB), which will lead the review, told Agri Investor.
“Concern is regarding the increased interest in owning Saskatchewan farmland by pension funds and foreign money being utilized by Canadians for the purchase of farm land,” he added later.
For Agcapita, a retail farmland fund house that invests across Canada’s farmland market, the debate is largely irrelevant because its funds are restricted to Canadian residents and citizens and are therefore in line with 2003 legislation. Before then, farmland could only be owned by Saskatchewanians.
But Stephen Johnston, founder of Agcapita, which has around C$50 million of assets under management, does not agree that financial investors are contributing to the increase in farmland prices.
“Financial investors are not a material part of the Canadian farmland market which in the prairies alone is worth over $100 billion,” he said. “Even in Ontario where there have never been restrictions on farmland ownership, there is no evidence that financial investors have had a material impact on pricing levels, cash rental rates (perhaps only to reduce them), farm sizes or land ownership trends, according to research.”
Local farmers are responsible for the vast majority of farmland transactions – 90 percent in Saskatchewan, according to one source – so are therefore responsible for rising land prices, argue investment managers.
And no-one is arguing that Canadian citizens or residents should not be able to buy farmland, said FLRB’s Folk.
“It is not contemplated that this review would look at reverting to the pre-2003 legislation, just to ensure only eligible individuals and entities are owning Saskatchewan farmland,” he said.
CPPIB was approved as an eligible owner of the land it acquired from Assiniboia Capital Corp, a Canadian agriculture investment company, at the time. Other Canadian pension funds are restricted from owning Saskatchewan farmland, however, because some of their beneficiaries may no longer be Canadian residents. This is where some question marks are being raised about CPPIB’s eligibility, according to reports.
The restriction of other Canadian pension plans has kept Bonnefield Financial, the institutional farmland fund manager, from investing in Saskatchewan for many years, according to Marcus Mitchell, director of portfolio operations, Bonnefield Financial.
“To date Bonnefield has invested relatively little in Saskatchewan – only about $11m across approximately 9,000 acres,” he told Agri Investor. “All of the capital for these investments has come from qualified, private Canadian investors in accordance with farmland ownership legislation in Saskatchewan.”
“The bulk of Bonnefield’s capital comes from Canadian pension funds that are not eligible to invest in Saskatchewan. As a result, we have not been active in Saskatchewan for several years and have directed all of our activity to farmers in other provinces.”
But both Johnston and Mitchell add that farmers are or will be in need of capital for expansion, amid the generational shift occurring across the sector.
“Because of the ownership restrictions in Saskatchewan, the province is not a priority area for us, however, we frequently receive enquiries from Saskatchewan farmers who have seen Bonnefield partner with farmers in other jurisdictions to fund growth and expansion, reduce debt, or plan for retirement and succession. Unfortunately we are unable to help support Saskatchewan farmers under the current ownership regulations,” said Mitchell.
Johnston added: “All the participants in this debate know that there will be a large wave of retiring baby-boomer farmers and a commensurately large amount of capital will be required in order to ensure that they get the appropriate price for a lifetime of work.”
Just C$500 million of an overall C$130 billion Canadian farmland market is managed by Agcapita, Bonnefield Financial and CPPIB.
Hancock Agricultural Investment Group, the subsidiary of Canada’s Manulife Financial Corp, and Westchester, the global agri manager for TIAA-CREF, are also understood to have operations in the country.
CPPIB declined to comment.