CPP’s farmland investment benefits province

Leduc is senior managing director of public affairs for the Canada Pension Plan Investment Board.

The Canada Pension Plan Investment Board bought 115,000 acres of Saskatchewan farmland from Assiniboia Farmland LP a little more than a year ago. Some misinformation has been circulating about this and I want to set the record straight.

CPPIB exists to help provide a foundation upon which Canadians build their financial security in retirement. The assets that we manage belong to more than 18 million contributors and beneficiaries who participate in the Canada Pension Plan (CPP), including more than 700,000 Saskatchewanians.

Our board believes farmland is a good investment because well-run farms that are properly maintained provide stable returns over the long-term and add diversity to our investment portfolio.

CPPIB is able to spend money on making improvements to the farms, and to own the land for decades. During that time, many emerging countries will see rapid increases in population and wealth, increasing the demand for food. Saskatchewan has the potential to be a big beneficiary of this global trend.

We spent a long time studying farming dynamics before we bought this land. And we’re proud to own it.

Assiniboia is an agriculture investment company founded and based in Regina. It had previously bought the 115,000 acres, much of which grows wheat, barley and canola. We liked its business model, which supports family farms in Saskatchewan.

It helps farmers to cash in on their land while still allowing them to run — and even expand — their farms if they choose. Assiniboia is now doing that on CPPIB’s behalf, and with our financial backing.

It’s playing an important role in a market where many young farmers don’t have the money to buy their parents’ farms. Loans can be hard to secure, and for a long time now, roughly 40 per cent of Saskatchewan’s farmland has been rented, rather than owned, by those who farm it.

Within about six months of owning the land we ensured that 18 abandoned buildings were demolished, seven old storage and fuel tanks were removed, and three yard sites were cleared up. Two ponds that were being used to dump waste were cleaned out, and an abandoned water well was capped. We are working on improvements to irrigation, storage and drainage.

We want to partner with local farmers to improve production techniques, and the livelihoods of those who work in the sector.

Premier Brad Wall’s government has made clear its desire to foster a competitive, strong and vibrant economy. The long-term vision that he laid out in 2012 included increasing crop production by 10 million tonnes by 2020, and boosting exports of agriculture and food products to $15-billion. We want to contribute to those goals through our investment.

CPPIB is a patient, responsible, long-term investor. We do not plan to amass huge individual holdings of farmland, or to squeeze out returns. We will make reasonable investments to improve farms and help those farmers who choose to partner with us to compete.

The investment board paid Assiniboia about $120 million for the land. If we bring our investments in Saskatchewan farmland up to $500 million over the next five or six years, CPPIB would still constitute less than one per cent of the market. Large investors make up a tiny sliver of Saskatchewan farmland transactions.

We did this deal in full daylight, following all the rules, trusting in Saskatchewan’s stable regulatory environment and its desire to foster a thriving economy.

Contrary to what’s been alleged, CPPIB did not make use of any loophole. The Saskatchewan Farmland Security Act allows CPPIB to buy farmland because we’re Canadian. CPPIB was created for Canadians by an act of Parliament — the Canada Pension Plan Investment Board Act. Any changes to that act require approval from two-thirds of the provinces representing two-thirds of the country’s population.

The SFSA was updated in 2002 to allow both Canadian individuals and Canadian entities to own farmland. It says that foreigners and publicly traded companies are restricted.

CPPIB is quintessentially Canadian. We work for the millions of Canadians who have contributed hard-earned dollars to the CPP and want to see that money put to work in investments such as Saskatchewan farmland. Other than the traditional family farm, it is hard to imagine another owner that better represents both the interests of Saskatchewan residents and the province’s own goals.