Saskatchewan is reviewing its farmland ownership laws in an attempt to close loopholes that have raised the ire of producers.
“We’re in the process of looking at our options right now and beginning to review the act,” said agriculture minister Lyle Stewart.
Rick Swenson, leader of the provincial Progressive Conservative party, is pleased the Saskatchewan Party government is “finally starting to wake up.”
He has accused the Saskatchewan Party of bending land ownership rules to appease some of its high-powered friends.
Assiniboia Farmland Limited Partnership (AFLP) closed a $128 million deal in January 2014 to sell 115,000 acres of Saskatchewan farmland to the Canada Pension Plan Investment Board. (CPPIB)
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The province’s Farm Land Security Board approved the deal despite rules that prevent pension funds from buying farmland. It said CPPIB had a unique corporate structure that allowed it to circumvent the rules.
The PCs have been running a television ad accusing the government of nepotism.
Doug Emsley, president of AFLP, once served as assistant principal secretary to premier Brad Wall, while Brad Farquhar, vice-president of ALFP, is a former executive director of the Saskatchewan Party.
“Clearly this deal is to satisfy the business interests of some of the premier’s political friends and forgets the interests of Saskatchewan farm families and our communities,” Swenson said in the ad.
He believes the Saskatchewan Party is finally succumbing to mounting pressure from farmers who don’t want to compete for land with pension funds and other institutional investors.
“I think a lot of the rural MLAs are starting to feel the heat,” he said. “They understand that some of this stuff had more to do with Sask Party politics than it did with good legislation.”
However, he said he won’t be satisfied until the investment board is forced to divest itself of its Saskatchewan farmland holdings.
Stewart said the ties between Emsley, Farquhar and the Saskatchewan Party had nothing to do with the board’s ruling.
“That’s absolute nonsense. We looked at this and looked at the potential to stop it and were advised by legal opinions that we cold not stop this.”
Stewart said the province is re-ponding to producer concerns that they will be competing for land with an entity in charge of $234 billion in assets.
“Producers don’t see that pension funds, with potentially billions of dollars to invest, are fair competition, and I get that,” he said.
The province felt the CPPIB decision would be a one-time occurrence because of its unique corporate structure.
“Now there are others that are claiming to have similar structures, and others yet that may be restructuring to copy the CPPIB model.”
Farmers are also upset over recent cases in which Canadians use foreign money to buy farmland.
“What is the source of offshore money? Is it a legitimate loan or legitimate inheritance or is it government-backed money or institutional money from foreign countries purchasing farmland in Saskatchewan?” asked Stewart.
The province recently hired a special investigator to trace the source of funds in two cases of Canadian-fronted foreign capital investments and found no wrongdoing. Stewart refused to divulge which land dealings were investigated.
Another case that could be ad-dressed in the proposed legislative changes is Skyline Agriculture Financial Corp., a foreign company that has developed a complicated structure involving loans, interest rate swaps, derivatives and hedging in an effort to comply with the province’s land laws.
Skyline is suing the province in what could be a landmark case. It says the Farm Land Security Board erred in a recent ruling that prevented the company from buying 15 acres of farmland.
Stewart said the province needs effective laws to keep land in the hands of the people who farm it.
“When things are not going so well in agriculture, equity in farmland is what keeps farms going,” he said.
He cited the demise of Broadacre Agriculture as an example. The company, which owns 9,000 acres of Saskatchewan farmland and leases an additional 56,000 acres, was recently placed under creditor protection after running into financial difficulty.
“(They) had no equity and when things went bad for them, they were immediately insolvent,” said Stewart.
“That’s a prime example of what can happen to every and any farm in the province if they don’t have equity.”
Swenson said he is not opposed to foreign investors, as long as they are farming the land and their children are riding school buses and hanging out at the local rink.
“You welcome people that want to come and do agriculture, but I want your butt on the farm,” he said.
Stewart said a revised act could be submitted to the legislature next fall at the earliest, with passage likely in spring 2016.
Swenson said the Saskatchewan Party is unnecessarily delaying the new legislation until after a provincial election.
“Is it an honest attempt to get the changes necessary, or is it some half-baked thing to let their friends off the hook and not really accomplish what needs to be done?” he said.
