The Canada Pension Plan In-vestment Board bought 115,000 acres of Saskatchewan farmland a little more than a year ago from Assiniboia Farmland LP.
Some misinformation has been circulating about this, and I want to set the record straight.
CPPIB exists to help provide a foundation upon which Canadians build their financial security in retirement. We manage assets that belong to more than 18 million contributors and beneficiaries who participate in the Canada Pension Plan, including more than 700,000 Saskatchewan residents.
CPPIB believes farmland is a good investment because well-run farms that have been properly maintained provide stable returns over the long-term and add diversity to our investment portfolio.
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CPPIB has the ability to spend money to improve farms and own the land for decades. Many emerging countries will see rapid increases in population and wealth during that time, which will increase the demand for food. Saskatchewan has the potential to be a big beneficiary of this global trend.
We spent a long time studying farming dynamics before we bought this land, and we’re proud to own it.
Assiniboia is an agriculture investment company founded and based in Regina. It had previously bought the 115,000 acres, much of which grows wheat, barley and canola, and we liked its business model, which supports family farms in Saskatchewan.
It helps farmers cash in on their land while still allowing them to run, and even expand, their farms if they choose. Assiniboia is now doing that on CPPIB’s behalf and with our financial backing.
It’s playing an important role in a market where many young farmers don’t have the money to buy their parents’ farms and loans can be hard to secure. For a long time now, 40 percent of Saskatchewan farmland has been rented, rather than owned, by the farmers who farm it.
Within about six months of owning the land, we ensured that 18 abandoned buildings were demolished, seven old storage and fuel tanks were removed and three yard sites cleared up. Two ponds that were being used to dump waste were cleaned out. An abandoned water well was capped. We are also working on improvements to irrigation, storage and drainage. We want to work with local farmers to improve production techniques and the livelihoods of those working in the sector.
Premier Brad Wall’s government has made its desire to foster a competitive, strong and vibrant economy clear. The long-term vision that he laid out in 2012 included in-creasing crop production by 10 million tonnes by 2020 and boosting exports of agricultural and food products to $15 billion. We want to contribute to those goals through our investment.
CPPIB is a patient, responsible, long-term investor. 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 work with us to compete.
CPPIB paid Assiniboia $120 million for the land. 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 percent of the market. Large investors make up a tiny sliver of Saskatchewan farmland transactions.
We did this deal in full daylight, following all the rules, trusting in Sask-atchewan’s stable regulatory environment and its desire to foster a thriving economy.
Contrary to what’s been alleged, CPPIB did not make use of any loophole. The Saskatchewan Farmland Security Act allows CPPIB to buy farmland because we’re Canadian. CPPIB was created for Canadians by an act of Parliament, the Canada Pension Plan Investment Board Act. Any changes to the act require approval from two-thirds of the provinces representing two-thirds of the country’s population.
The Saskatchewan Farmland Security Act was updated in 2002 to allow Canadian individuals and entities to own farmland but restrict foreigners and publicly traded companies.
CPPIB is quintessentially Canadian. We work for the millions of Canadians who have contributed hard-earned dollars to the CPP and want to see that money put to work in investments such as Saskatchewan farmland. In the tradition of the family farm, CPPIB will work hard to represent both the interests of Saskatchewan residents and the province.
Michel Leduc is senior managing director, Public Affairs, with the CPP Investment Board.
