The Saskatchewan government will take more time to review its farmland ownership law before considering possible changes.
Agriculture minister Lyle Stewart said April 13 that further consultation and review will occur over summer, during which time institutional investors such as pension plans won’t be allowed to buy land.
The government has been looking at the Farm Security Act since the Canada Pension Plan Investment Board’s purchase of 115,000 acres from Assiniboia Farmland Limited Partnership led to concern.
The justice ministry said the purchase was legal, but Stewart said the question might have been too narrow.
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“The answer is that CPPIB (Canada Pension Plan Investment Board) is eligible to purchase farmland in Saskatchewan, but the act as it’s currently written does not allow Canada Pension Plan, CPP, who are certainly the parent company of CPPIB, to enjoy the benefits of ownership such as capital appreciation,” Stewart said. “That’s the thorny question.”
The investment board said in a news release that it was concerned about the temporary halt to purchases by institutional investors because it intended to buy more farmland. It said it would participate in the government’s review.
Under the existing law, non-Canadian residents and corporations that are not Canadian controlled can own only 10 acres. Companies that might be partly foreign-owned but controlled by Saskatchewan residents can own up to 320 acres.
There are no restrictions on Canadian residents or Canadian companies.
However, the investment board’s large-scale purchase raised eyebrows.
Stewart said the consultations and review should clarify what Saskatchewan people want.
“We need to know if people want the act liberalized so that institutional investors can accrue the benefits of ownership, like capital appreciation, or if they want the act clarified to prevent further purchases,” he said.
“We have to get this worked out one way or the other because there’s a contradiction right now.”
Stewart has met with farm organizations and stakeholders but wants more input from producers, agribusiness and interested Saskatchewan residents.
Details of how the consultation will proceed will be released later, he said, but will include online and mailed submissions. Public hearings are not planned.
The act could eventually stay the same, Stewart said. If changes are to be made, a bill could be introduced in fall and passed next spring.
A provincial election is looming, but Stewart said he didn’t think farmland ownership would become an issue.
Feedback and comments to his office have shown that most in the farming community aren’t pleased with the pension plan investment board’s purchase. Others, such as the Chamber of Commerce, aren’t as worried.
“We’re trying to be neutral on this,” Stewart said of the government’s position.
Meanwhile, he said the Court of Queen’s Bench ruled March 26 in favour of the Farm Land Security Board’s decision against Skyline Agriculture Financial Corp.
Skyline was interested in investing in farmland but also admitted to the board that some of its funding was not from Canadian sources. It approached the board ahead of time to seek a ruling, and the board said it could not use foreign funds to buy land. The matter then went to court.
Stewart said he was pleased with the court’s decision, but noted the existing legislation might not give the board the tools to prevent this from happening in the future.
“Skyline was very honourable in their approach,” he said.
“They voluntarily went to the Farm Land Security Board for a ruling, but the Farm Land Security Board has no opportunity to see most of these deals before they actually transpire.”
Besides the ban on purchases by pension plans, the board will also enforce the following regulations during the consultation period:
- Further define pension plans, administrators of pension fund assets and trusts as not Canadian-owned entities.
- A family trust with fewer than 10 Canadian individuals listed as beneficiaries will still be able to purchase farmland.
- Having an interest in farmland is defined to include any type of interest or agreement, direct or indirect, that results in any of the benefits, such as capital appreciation, either directly or indirectly, of owning of the land.
- Farmland purchases must be financed through a financial institution registered to do business in Canada, or a Canadian resident.
