Broadacre Agriculture seeks bankruptcy protection | Pension fund ineligible to own land
One of Saskatchewan’s largest grain farms could have stayed afloat if not for a wishy-washy provincial government policy, says the company’s chief executive officer.
Broadacre Agriculture has been granted creditor protection by the Court of Queen’s Bench of Alberta after the company was unable to service its loans.
The firm has until Dec. 4 to figure out how it will pay its creditors and exit the grain business after amassing 65,000 acres of owned and leased land in the province over the past three years.
Broadacre CEO Gary Pike said it all could have been avoided if a Canadian pension plan was allowed to invest in the company.
The firm had a deal in place with an unnamed pension fund that was willing to inject much-needed capital.
“They were willing to take us to the next step,” he said.
However, Saskatchewan’s Farm Land Security Board killed the deal by ruling that the pension fund was ineligible to own farmland.
Pike is baffled by the ruling, considering that earlier this year the same board ruled that the Canada Pension Plan Investment Board could acquire 115,000 acres of Saskatchewan farmland from Assiniboia Farmland Ltd. Partnership.
“All of this could have been resolved if (Saskatchewan premier) Brad Wall had a clearer policy on pension funds,” he said.
“It’s hard to figure out why some Canadian pensions qualify and others don’t.”
Mark Folk, general manager of the Farm Land Security Board, said the Saskatchewan Farm Security Act prevents pensions from owning farmland in the province.
The only eligible entities are corporations, partnerships, syndicates, joint ventures, co-operatives or another similar entities owned by Canadians.
“The Canada Pension Plan Investment Board is a rather unique structure that fit under a corporation and not a pension,” he said.
The board, not the pension plan, owns the land and the board was deemed to be a Canadian-owned corporation.
Dan Patterson, former general manager of the Saskatchewan Farm Land Security board, said the optics are bad in this case.
Two of Assiniboia’s principals have strong ties to the ruling Saskatchewan Party.
Doug Emsley, president of Assiniboia, once served as assistant principal secretary to the premier of Saskatchewan.
Brad Farquhar, vice-president of Assiniboia, is a former executive director of the Saskatchewan Party.
Patterson said the Farm Land Security Board is an independent tribunal that needs to distance itself from the government in such cases.
“My view is that the board has to be extremely careful in these situations to not just act independently but to be seen to be acting independently,” he said.
“In this case, moving it to court to have an adjudication of the Canada Pension Plan issue would have been the wise thing for the board to do because then they would be seen clearly as acting independently.”
He said it is a “bizarre notion” that an investment board owns the $234 billion in Canada Pension Plan assets.
Folk acknowledged that the board received a legal opinion from the justice department that factored into its determination, but the board made the final decision.
He said the Assiniboia case was handled like any other similar case and didn’t need to be put in front of a court of law.
“Mr. Patterson has his opinion. That wasn’t an opinion that the Farm Land Security Board agreed with,” said Folk.
Pike is frustrated by what he sees as a double standard when it comes to determining who can own Saskatchewan farmland.
“This thing is something that needs to be straightened out,” he said.
“What better place to have some of our pension plan working for us than in primary agriculture where there are opportunities to make money.”
Patterson doesn’t think the province should be heading down this road at all. The CPP’s investment board has stated that it intends to invest $2 to $3 billion in farmland over the next five years.
He wonders how his young farmer neighbour near Moose Jaw, Sask., will be able to compete against a land buyer with those kinds of resources.
Patterson thinks allowing pension funds to buy land will accelerate the growth of corporate farming and the corresponding demise of rural communities.
“It will essentially change the face of Saskatchewan,” he said.