For those concerned about the future of Canadian farming, the inability of farmers to capitalize their own farm is a serious issue.
Land ownership is the most stable and lucrative part of farming; without a pathway towards it, many people who want to farm will inevitably choose other business opportunities, typically outside of their communities.
The future of family farming in Canada thus depends on farmers accessing the kind of farmer-centric capital that puts them in a position to own.
The scale and cost of modern operations are changing Canadian farming. Land, machinery, and inputs require such large capital investment that farmers are left asking fundamental questions: How will they purchase enough acres to give their children the farming opportunity that their parents provided? How can children ever accumulate enough equity to build a farm themselves? What will it mean for future generations of family farmers and their communities if institutional investors make a landlord tenant model the new norm in Canadian agriculture?
Reports this week out of Saskatchewan tend to group farmers in two opposing categories. Farmer ‘A’ is an older farmer who wants to sell his farm. Farmer ‘A’ supports pension fund ownership of farmland because bigger investors drive up the price of farmland. Farmer ‘Z’ is a young farmer looking to buy into a farm. Farmer ‘Z’ wants to restrict large institutional investors to keep land prices low.
This simple story may sell papers, but it misses the bigger picture.
Last week, Saskatchewan’s government announced that it is restricting pension funds and other investors from purchasing farmland. Saskatchewan has nearly half of Canada’s farmland. The Canadian Pension Plan Investment Board, the group most effected by the decision, is Canada’s largest institutional investor. So it is no wonder that the decision has people talking. The question is whether people are having the right conversation, because whether pension funds are allowed to invest in Saskatchewan or not, Canadian farmers are facing a financing crisis. Farmers cannot get access to the right kind of capital to build stable farms. Now is the time to change that.
