Billboard advertising farmland for sale in Canada.
Pension funds barred from Saskatchewan land purchases
The government of Saskatchewan has tightened its already stringent land ownership rules, prohibiting out pension funds and any business with any overseas-issued debt on its books, from owning land.
The provincial government has also beefed up the Farm Land Security Board, with new powers to enforce the rules, and issue large fines.
The move is meant to protect farmers in Canada's biggest wheat-growing province from spiralling rents.
The measures, which have been in the pipeline since April this year, were announced by agriculture minister Lyle Stewart on Tuesday.
Investors pile in
Saskatchewan farmland has proved popular with investors over the past few years.
A report released by Farm Credit Canada earlier in the year showed that the value of Saskatchewan farmland rose by 18.7% last year, the fastest growth of any province in Canada.
In fact, farmland values in the state have nearly doubled in just five years.
Farm price have been supported by exchange rate effects, which have left the Canadian dollar down around 17% against the US dollar last year, making land purchases relatively more attractive for investors with greenback-denominated warchests.
And this price-appreciation comes despite existing ownership regulations, which exclude non-Canadian individuals and foreign owned companies.
But concerns have been rising among farmers that large-scale land purchases are driving up rents.
Consultations conducted by the government of Saskatchewan earlier this year found that 87% of residents and other interested parties surveyed opposed foreign ownership of farmland, and 75% opposed ownership by pension funds.
The consultation was triggered by land purchases by the federal government-run Canada Pension Plan.
The new rules will prevent any further such purchases by pension funds.
"While they have purchased some farmland, we will not be ordering divestiture since at the time that they purchased it, the purchase was legal," said Mr Stewart.
"They would not be eligible to purchase farmland again."
The Canadian Pension Plan's board expressed its disappointment with the move, and stated its belief that its investments "would serve the best interests of farm partners, the economy and the public interest".
There will also be moves to close loopholes that were believed to be allowing foreign companies to invest in land.
"There's a belief that some transactions were slipping under the radar, transactions that would be illegal, and that the Farm Land Security Board couldn't stop them," said Mr Stewart.
The Farm Land Security Board will get tougher powers to enforce the rules, and levy fines of up to CAN$500,000.
And even fully Canadian owned companies will be excluded from land purchases, if they hold any foreign-issued loans or debt instruments.
The move seems designed any situation where a company's collapse could see its farmland assets fall into the hands of overseas creditors.
"If a foreign financial institution or individual loaned the money to purchase the farmland and then subsequently foreclosed, that foreign entity would be the owner of the farmland, so I think that's where the concern comes with foreign financing," MR Stewart said.