I am sure farmland ownership has been a controversial issue since the first stones were piled around a field.
For most prairie farmers, land ownership has been tied to survival of the family business. Land is the equity sink where producers can invest their money with reasonable expectations of growth and profit.
Most importantly, land is a future asset that lenders will always take as collateral, even when times are bleak. It has often been the only thing standing between farmers and an untimely exit from the business.
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Lenders like it because they know many farmers will skip meals before selling it.
It brings stability to a volatile industry.
As a result, farmers are often of mixed emotions when it comes to who should be allowed to own land and bid up its price.
They’re happy to see the price of something they own rise, even when it is higher than what should be paid for agricultural use. However, they’re also sad because if they want to buy it, they know it will likely be a long-term investment.
Low interest rates make these prices possible for producers, but that cuts two ways.
Farmland has become attractive to non-farming investors because of the poor performance of equity and bond markets. It also appeals to high-wealth investors looking for ultra-long, multi-generational investments that will pay off like a lottery when the world’s population really does exceed the planet’s ability to produce food. It’s their grandchildren’s hedge against a high cost food economy.
However, for farmers trying to acquire more land so that they can include another family member or two in the business, it means changing their traditional business model as they turn to more renting.
Consequently, the results of this past week’s Saskatchewan land ownership survey didn’t surprise me. Seventy-five percent of respondents opposed Canadian pension fund ownership, 87 percent opposed foreign ownership and 69 percent did not support foreign financing.
Sixty-two percent of the respondents were farmers.
