New players | Researchers say nearly 800,000 acres are owned by out-of-province investors
A former Manitoba businessperson who now resides in Alberta has taken a major interest in Saskatchewan.
Robert Andjelic said his portfolio of Saskatchewan farmland has grown to 180,000 acres over the past four years.
“I’ve been studying the market for a lot longer,” said Andjelic, who previously owned industrial warehousing.
“I got bored with retirement and looked at other opportunities, and farmland presented itself as one of the best.”
Andjelic is emblematic of a new breed of landowner in the province: out-of-province investors, companies and pension funds who have made major investments in the province. The province has recently seen significant year-over-year gains in farmland values, but prices remain among the lowest in the country.
“I find Saskatchewan farmland to be very diverse in production and really about the best buy in the country,” said Andjelic.
Researchers surveying Saskatchewan land titles believe close to 800,000 acres are owned by out-of-province investors. Their tally puts Andjelic’s holdings at more than 160,000 acres, although Andjelic said it’s actually more.
They also count large portfolios of more than 100,000 acres owned by the Canada Pension Plan and HCI Ventures, as well as smaller holdings owned by host of other firms and familiar names, including Nilsson Bros. and Brett Wilson’s Prairie Merchant Corp.
Andre Magnan, a researcher from the University of Regina and one of the authors of the upcoming study, said their total doesn’t count larger family owned operations and Hutterite colonies.
“Family ownership is by far the dominant model of ownership that we’ve still got in Saskatchewan, as it is all across Canada, but things are changing” said Magnan.
“These new entities, they’re changing the fabric of how we think about farmland and how it’s owned and controlled.”
Magnan expects their research to be published in the new year, but details of the project were presented last week at the National Farmers Union convention in Saskatoon.
“We can’t say for sure when most of the activity happened. From some of the research I’ve done, I think it’d be fair to say a lot of this has happened since 2007,” said Magnan.
They are surveying 20 years of data but point to changes in landowner restrictions in 2002 as the launching point of the new landscape.
The researchers count almost 60,000 acres of investor-owned land in 2014 across the rural municipalities of Excel, Lajord and Harris. There were less than 3,200 acres 20 years ago.
Presenters at the NFU meeting raised concerns about this kind of ownership concentration, its role in escalating land prices and its effect on rural communities and farming practices.
“Saskatchewan people owned the land of Saskatchewan and when they changed the law, they set the stage for divestment and that’s what we’re seeing,” said Darrin Qualman, former NFU director of research who is also working on the project.
“We’re seeing Saskatchewan farm families divesting ownership of the province to very large, very powerful $100 million, billion dollar entities.”
Andjelic said most of his acres are farmed under cash rent deals. It’s all cropland, spanning from the U.S. border to Prince Albert. About 35,000 acres are farmed under crop sharing arrangements.
“We do joint ventures with young, progressive farmers that have the equipment,” he said.
“They put in their own land and we add our land and then I pay for most of the inputs and they pay for most of the equipment and they do the actual farming operation.”
The researchers listed Andjelic’s portfolio as the largest in the province. The second belongs to the Canada Pension Plan, which acquired the land from the investment group Assiniboia Farmland in 2013 in a $128 million deal.
Agricultural economist Ken Rosaasen said farmers and pension plans aren’t on an even playing field: farmers buy land with after tax income and pension funds make acquisitions with capital from pre-tax income.
“Any time you have a playing field that’s on tilt to that degree, it means we’re going to be shifting to investment, RRSP-owned land not owned by the farmer or people close to the community,” he said.
Rosaasen also raised concerns about larger operations owned by investors that aren’t able to balance a downturn in commodity prices or production with off-farm income.
It has been a hot button topic in the province since large, corporate farming operations such as One Earth Farms began leaving the sector and Broadacre Agriculture recently entered creditor protection.
“Family farms have certainly gotten a lot bigger, but they’re invested in the success of that operation in a different way,” said Magnan.
“They do things differently and they have less overhead and they can be a lot more efficient and leaner … than some of the big corporate outfits.”
Andjelic is listed among the Broadacre creditors.
“They had a different business model. Everybody has a different business model,” he said.
“It’s not the one I believe in. I believe in drawing in young farmers that are very good producers and very good businesspeople — honest, hardworking.… That works out very well for us.”