A study of Saskatchewan farmland purchases has found that investors have indeed driven up land prices, but others are also willing to pay more than assessed value.
Farmland values rose quickly from 2006-15, authors Andre Magnan and Annette Aurelie Desmarais say in a paper published by the Canadian Centre for Policy Alternatives. (PDF format)
For example, they rose 2.1 percent in 2006, the lowest rate in the period, and 28.5 percent in 2013, the highest rate, according to Farm Credit Canada. The 10-year average was 13.98 percent.
The study notes that non-farm investors became more active in the market after legislative changes made by the then-NDP government in 2003 that relaxed the 10-acre restriction on land holdings to Canadian residents and companies.
Investment took off in 2007 and concerns over rising land prices and ownership came to a head after the sale in 2014 of 115,000 acres from Assiniboia Capital Corp. to the Canada Pension Plan Investment Board.
The resulting controversy and consultation led to amendments in 2015 to prevent pension plans and large trusts from buying land.
Magnan and Desmarais analyzed land titles data to find owners who were not local farm families. They also paid the province’s Farmland Security Board for its data on farmland transactions to be able to identify buyers and sellers as well as prices.
The study found 37 investors, including the CPPIB, farmland investment companies, investment funds, individuals and a group of out-of-province agribusinesses that the authors call farmer/investor hybrids.
High-profile individual purchasers include investor Brett Wilson; the Aquilini family, who own the Vancouver Canucks; and Lulu Lemon founder Chip Wilson.
Under the hybrid model, investors included former feedlot owner Cor Van Raay; Nil-Ray Farms, owned by the Nilsson Brothers; and 3L Cattle Co., owned by the founder of a B.C. logging company.
The largest single owner is Robert Andjelic and Andjelic Land Inc. from Calgary, who owns nearly 161,000 acres in 78 rural municipalities, according to the study. His website indicates that number is closer to 200,000 acres.
The study notes that investment activity is unevenly distributed in the province because of soil type, land quality and prices. In 16 RMs, investors own more than five percent of the agricultural land.
Magnan and Desmarais took a closer look at those transactions.
“In the 16 ‘high activity’ RMs, investors paid more per acre of farmland, on average, than other buyers in all but two years,” they said. “Between 2007 and 2014, the years of increased investment activity, investors paid on average $882 per acre versus $633 per acre for other arm’s length buyers and $513 for buyers in family transactions.
“In other words, investors paid on average 39 percent more than other arm’s length buyers and 72 percent more than intra-family buyers for farmland in the 16 RMs we examined.”
Province-wide, in that same time period, investors paid an average of $239 per acre over assessed value, compared to non-investor arm’s length buyers who paid $96 per acre over value. Those figures equate to premiums of 50 percent and 21 percent, respectively.
The study notes that the fact investors have paid significantly more than other buyers supports concerns about speculation.
“Our research raises important questions about who should own farmland in Saskatchewan, and how much,” the report said.
“Although there are indications that the Saskatchewan farmland market has begun to cool, sound policy making around farmland ownership is necessary if we are concerned about ensuring access to land for the next generation of farming families, who are integral to the social and economic fabric of rural communities.”
Saskatchewan Agriculture Minister Lyle Stewart said the government doesn’t intend to stop Canadians from buying land. He said there are individual Saskatchewan residents who are also making large-scale purchases.
“Some people won’t be happy until we restrict ownership to not only Saskatchewan residents but Saskatchewan residents who are actually farming the land,” he said.
“We’re just not prepared to go that far. Farming is a business, and it’s a pretty substantial business.”
The percentage of the province’s 58 million acres of farmland owned by investors is 1.44 percent.