Persistent concerns about who is buying Saskatchewan farmland have pushed the province to act.
Agriculture minister Lyle Stewart said the province has hired a special investigator to study recent and future large land deals and trace the flow of money.
“There are lots of rumours about it,” Stewart told the Agricultural Producers Association of Saskatchewan’s annual meeting. “As far as we know, all of these people are Canadians and they’re welcome.”
Canadian citizens, corporations that aren’t publicly traded and permanent residents are allowed to buy as much farmland as they want.
However, non-residents and foreign corporations are limited to 10 acres.
Exemptions are often made for companies to establish operations such as potash mines. The Saskatchewan Farmland Security Board can also grant an exemption to allow people time to establish residence.
However, residents have begun to ask who their neighbours really are as investor-owned farms become more common.
“Does the government have a finger on the pulse of who is becoming land owners?” APAS delegate Terry Hildebrandt asked Stewart. “We don’t really know where the money is coming from.”
Some say farmland is selling far above what it would have a couple of years ago. It’s good for sellers but not so good for local buyers who say they can’t compete with deep investor pockets.
In particular, Chinese-Canadian investors have bought large tracts, including 27 quarters south of Regina, leading to speculation that the money is really coming from out of the country.
Stewart said complaints are already investigated, but the board’s capacity to do so is limited.
“So far it hasn’t been found that any of them have been funded by off-shore money,” he said.
The flow of money is important because it could reveal true ownership.
How about this for a novel idea? Ban all investor purchases. You can only own farm land if you farm it with only an exception for if you inherit it. No Toronto Bay Street investment companies, no Vancouver based speculators, no Calgary oil tycoons storing their money in land. None of it. Farm land for farmers (with an excepting for the children of farmers).
What are we waiting for? Until land prices are over $10,000/acre like they are in the US corn belt with all the investors outbidding any level headed farmer?
Farmland will hit a plateau, soon. Cultivated grain land is approaching $2,500 an acre in some areas. If farmers can’t get a 10% net return on land investment they won’t buy it and shouldn’t. If a farmer can’t get a 5% net return they won’t rent it. And if an investor doesn’t get a 5% net return he won’t invest in it. Do the math with grain prices today because of the drought in the USA. Now do the math with the 5 year average. A correction will happen with in 2 years if stocks go back to normal and interest rates rise.