Investors, lending policies increasing farmland prices: report
Investors are buying up Alberta farmland, driving up land prices across the province, according to a new report released this month.
The investors are buying farmland in small quantities, but the purchases are having a huge impact on the price of land in Alberta, said Katherine Aske, author of the paper that investigates the impact of farmland investors and their impact.
“One high purchase price can set a new standard in a wide region. Even in purchasing a small number of acres, investors are having a huge impact on prices,” Aske said.
Investors range from pension funds to farmers who are scooping up real estate and renting it out to other farmers. The trend of investor influence really started to take off after the 2008 market collapse, and it began in the global south, but over the last 10 years the phenomenon has moved to North America, Aske said.
Farmland typically didn't have volatile prices and investors wanted some slow and steady elements to add to their portfolios, Aske said, so they started looking at putting money there.
At the time, food prices were jumping and farmland was viewed as a way to potentially capitalize on the high prices, Aske said, along with investors wanting to capitalize on the chaos of climate change. Owning land allows investors to own water and other things which are essential to life on the planet, Aske said.
Banks' lending policies are having a profound impact on farms as well, said Aske. Banks are willing to shell out more cash to farmers, who then pay more for the land when they buy.
Farmers themselves are looking at farming more like investors, Aske said, noting it is now impossible in many cases to pay off a quarter section of farmland, even with a lifetime of farming conventional grain and oilseed on it.
“That means that essentially fewer and fewer farmers are able to buy land at all,” Aske said, which is causing land to be concentrated into fewer and fewer hands.
The land is then bought in the hopes the land price will increase. In future, when the investor sells the land, the farmers will make a profit from the sale, rather than from the product grown on it.
“The relationship there to land is really shifting to become one that's more speculative than about production,” Aske said.
In Alberta, it is difficult to know how much land has fallen into the hands of investors, Aske said, as the province forces researchers to pay thousands of dollars to access land title records. In other provinces, such as Saskatchewan, records are accessible, which makes it is easy to track the trend.
Once investors are involved, they often have more oversight on how the land is used and the production on the ground, and many have contracts with more stipulations on production.
As a result of all these changes, fewer and fewer farmers can afford to buy land. They are becoming tenants rather than owners, Aske said, which provides them with much less economic security.
“It disconnects them from the long-term health of the land,” Aske said.
It is more difficult to care for the land, Aske said, because farmers are focused on growing something that will have an immediate return rather than growing something such as a cover crop.
The change of investors' involvement in farming isn't inevitable, Aske said, and putting policies in place to limit investors from scooping up farmland would help keep the land in the hands of farmers.
Regulating bank lending policies for farmland would also help reverse the trend, Aske said, along with providing more financial security for farmers through programs such as a farmers' pension fund, so they aren't selling their land to their highest bidder when they are ready to retire.
CTVNews.ca Top Stories
A turbulent campaign nears its finale as Americans choose between Harris and Trump
A presidential campaign marked by upheaval and rancour headed for its Election Day finale on Tuesday, as Americans decided whether to send Donald Trump back to the White House or elevate Kamala Harris to the Oval Office.
Government calls $9M condo purchase an 'operational decision'
Foreign Affairs Minister Melanie Joly defends the purchase of a $9 million condo for the Consulate General of New York City at a parliamentary committee, as a necessary investment.
New homeowners find skeleton in attic 15 years after previous occupant disappeared
Homeowners in France have discovered a skeleton in the attic of an outbuilding while undertaking renovation work.
Netanyahu fires Israeli defence minister Yoav Gallant, after months of clashes over war and politics
Israeli Prime Minister Benjamin Netanyahu has fired Defence Minister Yoav Gallant after months of clashes over domestic politics and Israel’s war efforts.
Trudeau and Harris? Poilievre and Trump? Here's who Canadians think would work best with: survey
As Americans prepare to elect their next president on Tuesday, new data from the Angus Reid Institute suggests Canadians hold differing views as to which federal party leaders would be best suited to deal with either Donald Trump or Kamala Harris.
B.C.'s chief electoral officer defends election integrity after 'human errors'
British Columbia's chief electoral officer says "extremely challenging weather conditions" and a new voting system factored into human errors that saw ballots go uncounted in the provincial election — though none were large enough to change results.
'Extreme disregard for the safety of others': Lamborghini driver gets prison sentence for 2021 Toronto crash
A mortgage broker who totalled his Lamborghini and left a passenger with life-altering injuries after trying to pass a Toronto streetcar at nearly three times the speed limit has been handed a two-and-a-half year prison sentence.
North Vancouver man wins ticket lottery for concert that BCLC can't legally say is the Eras Tour
In another news release littered with Taylor Swift references, the British Columbia Lottery Corporation announced the winner of its "Concert of a Lifetime" giveaway Tuesday.
'I’m not proud of it': Jason Kelce apologizes after video shows him spiking a cellphone after fan used a homophobic slur
Jason Kelce issued an apology during ESPN's 'Monday Night Countdown' after a viral video captured a 'heated moment' between the retired Super Bowl champion and a fan over the weekend.