BUSINESS

Saskatchewan wrestles with controversial issue of farmland ownership

05/22/2015 04:00 EDT | Updated 05/21/2016 05:59 EDT
CALGARY - Saskatchewan Agriculture Minister Lyle Stewart expects to catch an earful when the province's residents start to weigh in on who should and shouldn't be allowed to own farmland in Canada's breadbasket.

"There are strong opinions on both sides, and that's why we're doing this consultation," Stewart said in a telephone interview.

"We really want to know what people think and we're hopeful that a consensus will emerge from this."

The province announced public consultations Wednesday to gather public feedback on pension plans and foreign investors potentially buying farmland in the province.

The consultations come amid increasing concern that foreign buyers are circumventing laws that limit foreign ownership to just over four hectares.

Stewart says the Canada Pension Plan Investment Board's announcement in late 2013 that it will spend about $120 million to buy close to 46,540 hectares of land raised further controversy, since many thought pension plans had already been restricted from buying farmland.

Last month, the province temporarily expanded ownership restrictions to specifically exclude pension funds including the pension board from buying farmland and limit financings of farmland purchases to ones that go through a financial institution registered to do business in Canada.

Since its initial $120-million investment, the pension board has spent $33.7-million buying more farmland in Saskatchewan. The board says its intention has been to spend about $500 million buying Canadian farmland in over five years.

The worry is pension funds and other deep-pocketed investors could drive up land prices. That would make it even harder for younger people to take up farming, says Norm Hall, president of the Agricultural Producers Association of Saskatchewan.

"A lot of young guys that are raised on the farm want to farm," says Hall. "But the dollar amount to get in on the operation, even to buy their first quarter, getting that down payment is almost unmanageable."

Hall says opinions are mixed in the association about whether pensions should be able to buy land, though there is a fairly strong consensus that foreign ownership should continue to be restricted.

The Saskatchewan Chamber of Commerce has come out in support of foreign individuals and pension funds being allowed to buy land, but not companies or governments.

"We've had many discussion with the CPPIB folks, and the companies that they work with here," says Steve McLellan, CEO of the Saskatchewan Chamber of Commerce.

"We've had conversations with farmers, we've surveyed our members, and the consensus is clear — they're a good partner for Saskatchewan farmers, they're good landowners, they're good neighbours."

The pension board rents out the land it buys to farmers, which it says allows young farmers without much money to get into the business. Since the 1980s, roughly 35 to 40 per cent of farmland has been farmed under lease agreements, the board says.

Saskatchewan has one of the strictest farmland ownership laws in Canada at four hectares, while Alberta allows foreign entities to own twice that and Manitoba allows just over 16 hectares. Ontario and British Columbia have no foreign ownership restrictions.

Saskatchewan also has the lowest-priced farmland in the country, averaging $881 an acre, compared with $1,388 an acre for Manitoba and $1,934 an acre for Alberta, according to Statistics Canada.

The public consultations on farmland ownership continue until Aug. 10.