Canada: Gov't eyes farmland act changes

Leader-Post | 18 February 2015

Gov't eyes farmland act changes
 
Ownership rules could be tightened
 
BY BRUCE JOHNSTONE
 
Farmland ownership rules in Saskatchewan - which are among the most restrictive on the continent - could be getting tighter to prevent further purchases of farmland by institutional investors, such as the $128-million acquisition of Assiniboia Farmland LP by the Canada Pension Plan Investment Board (CPPIB) in late 2013, says Agriculture Minister Lyle Stewart.

"The (Saskatchewan Farmland Security) Act of 2002 explicitly disallowed pension funds and investment trusts (from buying farmland in the province)," Stewart said an interview Tuesday. "That was the intent (of the act) and I'm getting a pretty clear message from farming country that's what they expect."

Stewart stressed that CPPIB's acquisition of 115,000 acres of Saskatchewan farmland was deemed to be legal under the act, since the Canada Pension Plan is owned by Canadian workers and pensioners. However, he believes the legislation, which was passed by the former NDP government, was intended to prohibit institutional investors from buying farmland in the province.

"The legal issues around the corporate structure of CPP and CPPIB are something that has to be determined - whether we need to deal with that, whether this was a loophole or something that was envisaged," Stewart said. "I have a clear opinion on that myself, but we'll see what stakeholders have to say."

Stewart said the ministry is conducting consultations with stakeholders, mainly farm groups and institutional investors, to determine what changes, if any, are needed to tighten up the act.

"We're hopeful that before the end of the spring session of the legislature that we'll have a definitive direction to announce and we'll be prepared to move ahead with that, whatever that may be," he said, adding the options would likely be either changes to legislation or regulations or some combination of the two. The earliest legislation could be introduced is spring 2016.

He also indicated that the ministry is grappling with attempts to skirt the foreign-ownership restriction on Saskatchewan farmland, which is a maximum of 10 acres.

Skyline Agriculture Financial Corp. of Vancouver, a foreign-backed investment fund that financed a 16-acre farmland purchase last year, was ordered to reduce its holding to 10 acres by the Farm Land Security Board. Skyline has appealed the FLSB's decision, which is currently before the courts.

Stewart said foreign ownership and institutional investor ownership are separate issues. "The concern is: where does this end and how big a deal does this get to be? It's not just about CPPIB."

In an op-ed piece in Tuesday's Leader-Post, Michel Leduc, senior managing director of public affairs for CPPIB, said the board's investment in Assiniboia Farmland LP was done "in full daylight, following all the rules, trusting in Saskatchewan's stable regulatory environment and desire to foster a thriving economy."

"Contrary to what's been alleged, CPPIB didn't make use of any loophole ... The SFSA was updated in 2002 to allow both Canadian individuals and Canadian entities to own farmland. It says foreigners and publicly traded companies are restricted."

Leduc said even if CPPIB bought up to $500 million in Saskatchewan farmland in five or six years, it would amount to less than one per cent of the farmland available.

Stewart said the government is aware of the danger of scaring away investment if it becomes too restrictive. "We are open for business in the province ... At the same time, we have provincial interests and there are number of questions that need to be answered about where our act should be."

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