Saskatchewan farmland sales are warming up in a climate of improved grain prices and new global customers.
Following the lead of the province’s brisk residential boom in recent months, farmland is starting to move, albeit slowly, said Roger Manegre, broker owner of Remax Realty in the Battlefords.
“People are not beating the doors down to buy farmland but that may change by January, February,” he said.
Manegre said there have been steady inquires from British Columbia and Alberta in recent months, including farmers who want to relocate and investors buying large tracts of farmland.
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The return on investment is modest but holds much potential, he said, calling Saskatchewan farmland a good bargain when compared with other provinces.
“If buying land now at current prices, five to 10 years down the road they could double their money.”
Roy Hjelte, a senior appraiser with Farm Credit Canada, cited studies that show a strong link between grain prices and land values.
“When commodity prices increase, we see correlating increases in farmland.”
FCC’s fall report indicated brisk sales in Saskatchewan, with farmland sales increasing by three percent in the last six-month period. That was the biggest increase in a decade, said Hjelte said.
Manitoba saw a 1.7 percent increase for the same period while Alberta recorded a 6.4 percent rise, the highest in Canada.
Higher grain and oilseed prices, expanding farms, competition between local farmers and demand from out-of-province investors are all fuelling land value increases, according to the report.
Investors are paying premium prices for quality land, most often near major centres, which produces pockets of higher value areas. However, prices remain stable in many parts of the province.
Hjelte said sales began to pick up in early 2000 with cattle producers buying pastureland in Saskatchewan. Today, Canadian and foreign buyers are purchasing land to farm themselves or to lease.
He noted the significant size of many parcels being acquired, as many as thousands of acres at a time.
The Assiniboia Farmland Limited Partnership is one group of investors that has been quietly buying land since 2005.
“When we first started, many said, ‘who wants to invest in farmland,’ ” said partnership president Doug Emsley.
“All of that is changing now.”
The land buying partnership idea was put together by another company that Emsley heads; Agriculture Development Corp. of Regina.
The idea banks on Saskatchewan’s future in agriculture, citing bioenergy, the continued production of feed and food stocks and new markets for meat protein in India and China.
The first two Assiniboia Farmland partnership offerings were oriented to narrow audiences of sophisticated investors. They acquired 26,000 acres. Emsley said the group believed Saskatchewan farmland prices were low relative to other places.
“We raised money from investors to acquire farmland so in the event that Saskatchewan land prices increased, we’d be able to take advantage of that.”
Emsley said it was an interesting revenue and cash flow opportunity for investors in light of an improved agricultural climate.
Improved commodity prices coupled with rule changes that now allow nonSaskatchewan residents to own Saskatchewan farmland have opened the province to outside investment.
This past year, the group opened its third partnership to a broader audience, with a public offering of 415,300 limited partnership units at $25 per unit for gross proceeds of more than $10 million. The minimum purchase is 100 units.
Their investors include urban and rural Canadians ranging from farmers to businesspeople.
Emsley said the group raises money to buy farmland, rents it to farmers, pay the bills and returns remaining revenue to investors semi-annually.
“It’s no different than owning a building,” he said.
Emsley thinks there is room for further expansion, noting the average 1,300 acre farm size often needs to be closer to 5,000 acres to be economically viable.
Many farmers are topping up their land base with rented land as returns from agriculture improve, he said.
Others are selling to investors as part of their succession plan, allowing elderly farmers to retire and cash out while giving their children the chance to rent the land back.
“We’re filling an interesting gap there,”
Emsley said.
