October 23, 2015

Saskatchewan’s Agriculture Minister, Lyle Stewart announced that the province has tightened its already stringent farmland ownership laws, closing loopholes to exclude pension funds or their administrators from owning farmland in the province.

Even with the existence of previously strict ownership rule, farmland values in the province have doubled in the past five years, increasing by 18.7% last year alone, according to a report by Farm Credit Canada which was released earlier this year.

Debates regarding the exclusion of pension funds from owning Saskatchewan farmland have been ongoing since the Canada Pension Plan Investment Board began acquiring large swaths of farmland in the province in 2013. Even though existing rules blocked institutional investors from owning farmland in the province, and limited foreign ownership to four hectares or less, the investment board was able to leverage aspects of its structure that allowed it to take advantage of loopholes in the law.

The decision to exclude pension funds and their administrators from ownership came after a government survey of more than 3,200 respondents indicated that 9 out of 10 people did not want the province’s farmland in foreign hands. Indeed, 87% responded that the did not support foreign ownership and 75% stated that they were against investors such as pension funds from purchasing farmland.

Farmers in the province have also raised concerns regarding the possibility that investor-owners would drive up land rents.

In addition to the newly enacted ban, the province has also enacted a regulation stating that even Canadian owners or Canadian investors interested in farmland acquisitions will need to go through financial institutions registered to conduct business in Canada or by a Canadian resident.

"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," said Mr. Stewart.

The Farmland Security Board has also been granted more power to enforce these regulations, and will be given the ability to enforce fines of up to C$500,000 where necessary.

Although the Canada Pension Plan Investment Board currently owns large pieces of farmland, the regulations will not be grandfathered, and divestiture will not be required.

"While they have purchased some farmland, we will not be ordering divestiture since at the time that they purchased it, the purchase was legal," Mr. Stewart said. "They would not be eligible to purchase farmland again."