Ag minister defends changes to the Farmland Security Act designed to stop foreign investors from pushing up prices
OTTAWA — The ability of farmers to act as fronts for foreign investors is coming to an end, and farmland prices now better reflect agricultural economics, says Saskatchewan’s agriculture minister.
Lyle Stewart said the practice of foreign investor financing being funneled through such “underground” farmland transactions are being stemmed by his province’s new land ownership rules, which reflect the values of its farming community.
The Canadian Senate is looking at farmland ownership and has challenged Saskatchewan’s new, more restrictive rules.
Stewart told the Senate’s standing committee on agriculture and forestry that the province believes the new regulations have worked as intended.
“Canada Pension Plan has ceased purchasing of farmland in Sask-atchewan at the time the act was passed and we believe that we have stopped foreign investment, even (though) previously it was more or less underground,” he said.
He said the amendments to Sask-atchewan’s Farmland Security Act that came into force in 2016 have given its Farmland Security Board greater powers of investigation.
“We think we have pretty well stopped any underground, foreign transactions,” said Stewart.
“Generally speaking, foreign investors were using Saskatchewan farmers as fronts to purchase farmland,” he told the senators.
Senator Dan Plett from Landmark, Man., pressed the minister about the process that allowed foreign ownership of farms.
“How do you police that? The farmer doesn’t repay the loan and I foreclose on his farm,” thus acquiring the farmland,” asked the senator.
Stewart explained that the legislation requires all land to be financed through registered Canadian corporations and land transfers be on file with the province.
Out-of-Canada shareholders in those companies must be registered and declare their interests and the companies must explain how the land was obtained.
Stewart said before the new rules, Saskatchewan’s investigators had to “chase these investors back, often to their homeland, to try to determine where the money actually (had) come from.
“In many countries there, China being the principal one, there was no co-operation with the Canadian investigation in China or of Chinese citizens,” he said.
The legislation switches the onus to the prospective investors, re-quiring them to prove eligibility prior to the land transfer.
Plett said the new rules seem like they are out of step with the political situation in Saskatchewan.
“Sounds an awful lot like what Allen Blakeney’s government would have been doing instead of Brad Wall’s government,” he said.
“I’m trying to get my mind around how a Conservative government is doing this…. Are the farmers that are wanting to sell their land happy with this arrangement?”
Stewart said the only pushback came from farmers nearing retirement, who thought the new regulations would affect their land sale price. He referred to a survey of producer opinions the province carried out.
He said when farmland price increases are thought to be fuelled by offshore, non-farming interests, it creates an issue for family farms.
“It raises the questions of how they can expand (those farms),” said Stewart.
Senator Victor Oh from Ontario was concerned that farm subsidies might be an issue with land value run-ups over the past decade.
Stewart said he doubted that was the case, suggesting that of the $14.4 billion in cash receipts for Saskatchewan farmers in 2015, only $585 million came from government supports, largely crop insurance, AgriStability and AgriInvest programs.
Senator Andre Pratte, former editor of Montreal’s La Presse, challenged the ag minister on the role that institutional investors such as the Canadian Pension Plan were having on Saskatchewan farmland prices.
However, Stewart said despite “good times in agriculture… (where) we would expect reasonable appreciation, I believe that a part of that, at least, would be attributable to institutional investors and illegal foreign investment.”
“In order to stay viable, farms have to continue to expand. The average commercial farm is probably 4,000 acres in this province now, where it would have been 300 acres when I was a child a number of years ago,” he said.
“In order to stay viable, you have to expand. In order to bring new generations into the industry, you have to be able to expand.”
He said that farmers and ranchers felt this ability was being taken away from them by the rapidly escalating prices, which seemed to be getting out of sync with the productive capacity of the land.
“Rightly or wrongly, they attributed a large portion of that appreciation to foreign and institutional investments.”