There are more gains to be had – for domestic investors - in
the farmland market in the major Canadian farming province of Saskatchewan even
after strong headway over the last five years, Agcapita said.
Karim Kadry, the fund's investment manager, acknowledged
that it was "possibility" that the slowdown evident in the US farmland market,
blamed on lower crop prices, may spread north of the border.
A survey last week showed US land prices declining in
January for a second successive month, after an unbroken period of growth
dating back to 2009.
However, values in Saskatchewan would be protected from any
downturn by their discount to prices in other major agricultural areas in
Canada, a legacy of rules, ditched in 2003, which limited ownership to residents
in the province, and so choked off investment flows.
Mr Kadry said: "In fact, we do not think there will be a
slowdown in Alberta," one of the other major Prairie provinces, with Saskatchewan,
which produce the vast majority of Canada's crops, including some 90% of its
"There is still more demand for farmland," he told
"But this is one reason why we are investing in Saskatchewan,"
where it owns some 45,000 acres, leased out to farmers to run.
"Even if prices drop in Alberta, they will keep going in Saskatchewan
to reach parity with Alberta."
Already, the easing of the Saskatchewan land ownership
restrictions has seen Saskatchewan prices rise from the equivalent of 30% of
Alberta values in 1996 to about 50% now.
That, coupled with the broader boom in farmland prices,
helped Agcapita sell 19,000 acres bought by its first fund, launched six years
ago, for Can$18m, more than twice the purchase price.
The group operates two further funds, and is raising funds
for a fourth one, although investment is limited to Canadian residents by national restrictions on land ownership.
Other investors in Saskatchewan farmland include Canada
Pension Plan Investment Board, which two weeks ago sealed the Can$128m purchase
of 115,000 hectares from private equity group Assiniboia Farmland.
André Bourbonnais, senior vice-president, private
investments at CPPIB said that farmland was "an attractive asset class that has
historically delivered stable, risk-adjusted returns and the global outlook for
agriculture in general is positive due to increasing demand for agricultural
"Farmland investments align well with [the board's]
long-term investment strategy while also further diversifying our portfolio."