Rewards of land investment must be balanced with risks

Western Producer editorial
The sense of community on the Prairies is strong. Connections to the land, neighbours and those we interact with every day form who we are. It is part of the very fabric of rural life.

That is why it is important for governments to act carefully, with a keen eye on the social implications of policies that could disrupt the composition, character and traditions that make up life here.

Questions have been raised recently about the appropriateness of allowing investment groups and pension plans to buy farmland in Saskatchewan.

The Saskatchewan Farm Land Investment Board recently ruled that the Canada Pension Plan Investment Board was eligible to buy 115,000 acres in the province.

For older farmers looking to scale back or making plans to quit the business, the investment is welcome because it could mean getting more money for land they sell.

The new investment can also mean more than just additional money for the purchase of the land. Proponents of allowing these investments point out that capital is the lifeblood of any industry, and new sources of capital can be a rare find. Can we afford to turn it down?

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Land investments can later lead to new equipment purchases, additional tax revenue, building materials and labour. And while it might be true that an investment fund owner won’t have an owner on site, there would be farm managers and employees who need food, clothing, and other essentials.

The spinoffs can be far reaching.

Critics complain that investments like these drive up area land values, pricing the property out of reach of local farmers who want to expand and new farmers looking to get started. These are arguments that should not be discounted.

Young farmers trying to gain a foothold in the industry shouldn’t have to compete against the massive wealth that is available to foreign nations and multinational companies. That’s why the continued ban that prohibits non-residents of Canada and foreign entities from owning more than 10 acres of farmland in Saskatchewan must remain in place.

However, there are grey areas. Skyline Agriculture Financial Corp., which wants to offer financing to farmers, is taking the province to court after the Farm Land Security Board ruled it contravened provincial land laws.

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The case will play out over the months ahead, but in principle it throws up red flags when a company says it wants to invest $50 million to $100 million over the next 10 years to enable farmers to buy land. Its complex model of mortgages, swaps and derivatives makes it different than a bank or other regular lender.
However, risks can be minimized with appropriate limits on how much land any entity is allowed to buy in any specific region and foreign ownership limits within investment groups.

Preventing too much concentration of land ownership in any one area should keep prices at competitive levels for both sellers and buyers.

Farmland does deserve special attention compared to other businesses because much more is involved beyond just the land. Those who own it and work it form the basis of rural communities. They forge local governments, shop at local stores and organize the 4-H club, while spending weekends maintaining the local rink.

There is a social fabric that must be both protected and nurtured at the same time.

Moving forward requires a delicate balance, but with the proper watchdogs in place the rewards can outweigh the risks.

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Bruce Dyck, Terry Fries, Barb Glen, Brian MacLeod and D’Arce McMillan collaborate in the writing of Western Producer editorials.

  • Terry

    The author of this opinion peice comes across as if everything is rosy out in rural Canada, but you don t have to look far to see that the ground has been prepared for these community degrading scenarios that a conservative agenda promotes.

    How many examples do you want? Grain elevators, family farm, wheat board, less practical rail movement, Walmart, university tuition, mom and pop stores closing, foreign land ownership.

    These are all things warned about with the loss of the prairie sentinel. Now our towns are drying up with mega farms . If we could only have just a tiny grain of foresight to not wholesale sell out the people that came here with nothing and built community , not tore it down. Policy makers these days make policy to create personal legacy not to create community legacy.

  • ed

    It looks like you guys would all agree that the tremendous screw up of lifting the CWB and thus the killing over time of rural Western Canada by our present government would not in any way be in keeping with your recommendations for them to “act carefully, with a keen eye on the social implications of policies that could disrupt the composition, character and traditions that make up life here.” Although not a glowing endorsement of the official oppositions opposite views on most of the present governments track on rural issues you might be on to something.