Farm ownership restrictions tightened
Changes earn mixed reviews
New restrictions being put on farmland ownership by the Saskatchewan Party government are getting mixed reviews from farm and business groups. While farm groups generally approve of the restrictions on institutional investors, some business groups say the move will scare investment away from the province.
On Tuesday, Agriculture Minister Lyle Stewart introduced amendments to the Saskatchewan Farm Security Act, which will further restrict who can own farmland in the province by excluding pension funds and other institutional investors. The amendments also provide the Farm Land Security Board (FLSB) with more authority to enforce the act, increase fines and require farmland purchases to be financed by a Canadian financial institution or a Canadian resident. The new act will take effect in 2016.
“Our government understands that to many in the province, farmland is not just an asset,” Agriculture Minister Lyle Stewart said in a statement. “It is a connection to our history and who we are as people. Farmers and ranchers want the opportunity to own the land they farm.”
More than 3,200 individuals, businesses and organizations were heard in public consultations earlier this year. Stewart said the overwhelming majority supported making pension funds and large investment trusts ineligible to purchase farmland, and limiting ownership of farmland to Canadian residents and 100-percent Canadian-owned corporations.
Norm Hall, president of the Agricultural Producers Association of Saskatchewan (APAS), said the changes are in line with the views of APAS members, who were surveyed on the farmland ownership rules earlier this year. “The government’s numbers (from the consultation process) were just about identical to the numbers our survey put out as well,’’ he said.
Hall added APAS members support restrictions on foreign and institutional investors, even if it does have a somewhat depressing effect on land prices. “Yes, it’s going to hold the value of the land down a bit.’’ Hall said. “Over the last five, seven years, look at the increase in value of Saskatchewan farmland. It’s doubled, tripled, quadrupled.’’
Not surprisingly, the Canada Pension Plan Investment Board (CPPIB), which inadvertently triggered the review of the legislation when it acquired 115,000 acres of farmland in late 2013 for $128 million, was disappointed with further restrictions on pension fund investments in farmland. However, the CPPIB will not be required to divest itself of the farmland already acquired as it was obtained legally under the old legislation and regulations.
“While we believe that the investment capital of Canadians and residents of Saskatchewan, on whose behalf we work, would serve the best interests of farm partners, the economy and the public interest, we fully respect the government’s role in setting public policy in a way that strikes a balance among various interests,’’ said CPPIB in a statement.
But Steve McLellan, CEO of the Saskatchewan Chamber of Commerce, worries the legislation could have a negative effect on investment in the province. “We do not believe this is a positive move as it will reflect badly on Saskatchewan as a place that should welcome investment,’’ said McLellan. “We’re trying to determine the magnitude of that (impact).’’