Pension funds have started buying up farmland around the world in recent years, seeing it as a safe, long-term investment.
Farmland investment companies such as AgCapita, Assiniboia Capital, Bonnefield Financial and Prairie Merchants are sowing the seeds of speculation across the Prairies.
Saskatchewan, with our low land prices and a farming population averaging 58 years old, is shaping up to be fertile ground for these companies.
Hundreds of thousands of acres of Saskatchewan farmland are already under the management of these investment companies.
Several seek to attract institutional investors such as pension funds and RRSP-eligible mutual funds to finance further land purchases.
AgCapita, which as of 2011 had bought $12.8 million of Saskatchewan farmland, is RRSP eligible.
Two RRSP mutual funds, Golden Opportunities and SaskWorks, have invested in farmland investment funds.
SaskWorks has invested $20 million with Agco Ag Ventures, and Golden Opportunities has funneled $3.5 million into Assiniboia Capital (via ADC Enterprises) as well as another $2.5 million into Input Capital Limited Partnerships, a division of Assiniboia.
Some of the financing for Assiniboia Capital’s acquisition of more than 115,000 acres across Canada has been provided by Farm Credit Canada, which is funded by Ottawa and pays dividends to the federal government.
Retiring farmers, and those suffering under the high debt levels seemingly inherent to modern farming, are targeted by these companies.
They rent the land back to farmers while waiting for the selling price to rise to sufficiently profitable levels.
Usually this is done on a cash rent basis, where all of the day-to-day risk of farming is borne solely by the renting farmer.
This situation has similarities to that in Europe of the 19th century, which is what led many Europeans to uproot their families and escape to settle in Canada.
Retiring farmers are faced with a choice: pass their land onto another family farmer, possibly taking less than the maximum value, or sell to the highest bidder with no concern for the legacy of the land.
Under this new system, retiring farmers should be happy in their twilight years, urban residents with pensions invested in farmland will be happy with the long-term outlook of their retirement money and the land grabbing companies will happily take their cut as land values and rents keep rising.
But how do we expect young Canadians to consider becoming farmers? The reality is that today there are not enough young farmers. Farmers younger than 35 represent only eight percent of the farming population, raising the question of who will work the land in the future? Who will grow our food?
This is where the long-term vision of retirement planning seems to have a blind spot. Speculation around farmland is already putting the cost of land out of reach for many individual farmers looking to either start or expand an operation, leaving investment companies with millions of dollars in capital in an even better position to increase their land holdings.
If more of them are able to generate investment dollars through RRSPs, it will further this cycle.
Policies and tax breaks that encourage Canadians to plan responsibly for their retirements are essential, but there is a clear lack of planning for the next generation of farmers.
Family farms have been the backbone of Canadian agriculture for our entire history and now they are being priced out of the market for the most essential of assets: the land.
Without a plan and policies in place to ensure that the next generation of Canadians can carry on our proud farming tradition, the only future in store for Canadian agriculture is one occupied only by the largest, most corporate farms sparsely scattered over an increasingly empty prairie.
This is not a future that bodes well for Canadian food security and sovereignty, and it certainly does not look promising for family farms.
That is not a future I want to see in Canada.