Who owns what in Sask.?

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.

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Comments

  • Stephen Daniels

    Very accurate and informative article that’s why I pay the big bucks for a WP subscription.Yes investors have paid a 50 percent premium over local demand in this area and locals are happy for the sellers that they could sell shit land at a premium.

  • John Wayne

    I am hoping no one is forgetting the name Marc Cohodes. He became famous in the movie called the Big Short. He thinks the Canadian real estate market is in a big bubble, especially the Toronto, Vancouver housing market. Shortly he is predicting a 50 – 80% decrease in the Vancouver market. He is also shorting a highly leveraged real estate consortium out of Toronto.
    As far as these high rolling Canadian land speculators that invested in our Sask. farm land and paying up to 50% premiums it is quite possible they made the wrong decision long term.
    These so called land speculators, what percentage of FOREIGN CAPITAL owns their company? We do know that China in the fall of 2016 have put in measures to restrict the capital outflow of currency from their country.

  • old grouchy

    Hmmmmmmmmmm – – – 1.4% of 58 million is 835 200. The largest investor is at 200k and with the next 3 my guess is that we are close to 700k acres. Somehow all the other investors are ‘only’ at 135k acres. I’m thinking that percentage is a wee bit low.
    Would be willing to bet that these lands are likely NOT the lower producing properties in their respective RMs either.
    Looked into the costs to lease land from one of these ‘investment groups’ having been given the previous operators long term average results (I would have rated said operator in the top decile for results) one would need to use a canola snow rotation in perpetuity to be able to lease that ground and have a chance of making perhaps a 1.5% ROI. Using even a wheat canola rotation would have had a negative long term
    ROI. Needless to say – – – – I didn’t lease that or any other ground. (I refuse to subsidize anything other than governmental waste and corruption – – – and I’m not given much of a choice in that!)

  • Dayton

    On the other hand many farmers are renting land from investors they could never afford to buy. Capital is always a problem with farming when there’s so much expensive equipt and inputs to buy.

  • Canadian farmer and proud !!!

    Hmm , when there is no one that cares about the land and what they produce . The family farms disappear for good . Then they will restrict land purchases like they do in France. The French have a history of putting their heritage and themselves first . They know what happens when outsiders take over . For those whom are uniformed . France is the largest wheat producer in the Eu . They produce the most dairy products . And of course the largest supply wine , and highest quality . Salts and seasoning are the finest in the world . The list goes on and on .
    It’s time we take note , before it is to late . Canada is currently the no one Durum wheat producer and the largest exporter of canola and maple syrup . Let’s keep it that way with pride !!

  • TrumpONE

    1.44% of 58 Million acres is owned by investors in a province that is cutting everything possible because of budget deficit and what do they do…kick out the people with the money who want to invest in the province. Its literally amateur hour. Sask is starving for money and they find a way to keep investors out because they own a whopping 1.44% of the province. And to think that investors that buy for a living are over paying is the dumbest part yet. Investors don’t over pay. Locals might by from locals below market because seller does not know what its worth but the people that depend on investing well and are professionals don’t overpay. Think about it… Amazing

    • M

      “And to think that investors that buy for a living are over paying is the dumbest part yet. Investors don’t over pay. Locals might by from locals below market because seller does not know what its worth but the people that depend on investing well and are professionals don’t overpay.”

      Farmland has always been bought and sold at market value, with the exception of transfers within families, etc. Investors pursue farmland on a short-term basis and speculate that land will increase. With very little farmland currently for sale, paying an extra 10% above the going rate not only increases the attainable value of other land for sale, it also strengthens the balance sheet.
      Back in the 1960’s and 70’s, my grandparents and parents would not purchase land unless they could pay for it within 3 years. Its changed significantly since then with farmland taking a substantial hit with high interest rates in the 80’s and remaining relatively quiet till the mid 2000’s. Currently, land is at a price where you cannot grow enough on the land to pay for it.
      A practise becoming more common and equally difficult to compete with are investor/farm hybrids where investment groups will invest capital into existing farms. As a farmer, I can pay a fair agricultural market value for land with some exceptions (close to home, very good land quality, adjoining to existing fields), but i can’t pay more since I’m not going to sell it at a latter date.

      • Dayton

        I disagree. Depends what you call farming. There are many profitable ones who aren’t intensive. A well managed Organic farm can still see annual ROI of 12 to 15%. Even on good land valued at $3,000 an acre.

    • Dayton

      Totally agree, we can’t continue to subsidize poor farmers at the expense of the elderly who worked all their lives for the nest egg. It’s all they have to retire with. Meanwhile Alberta and Manitoba let in foreign investors who pay premiums for land. What do those farmers do? Buy Saskatchewan Cheap…

    • Harold

      Why are Canadian farmers not considered to be the only investors? Too broke? Who is responsible to Canadians; foreign investors or investors in kind? If you want to talk about an amateur hour, I can assure you that you are looking in the wrong direction. Look at our own governments. Tax payers pay the inflation and taxpayers/Canadians loose the land. To understand this you have to understand the monetary system. Every failure in the Canadian monetary system has a direct connection between politicians and the Bank of Canada; that has been the amateur hour; the amateur was not employed at the Bank.

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