The Canada Pension Plan Investment Board (CPPIB), which manages the assets of Canada’s national pension system, announced on January 10, 2014 that it had completed the purchase of a portfolio of Saskatchewan farmland worth $128-million from a large farmland fund in Canada. This is one example of an increasing amount of activity that indicates a growing interest in Canadian farmland as an investment.
The portfolio consisted of 115,000 acres of farmland in the southern part of Saskatchewan in Western Canada that produces commodities that have recently seen major price increases and growing global demand, such as wheat, barley and canola. The land will continue to be managed and operated by the existing management team. CPPIB anticipates that the land will generate returns through leases, price appreciation and some productionsharing agreements with producers.
The CCPIB has indicted that “farmland is an attractive asset class that has historically delivered stable, riskadjusted returns and the global outlook for agriculture in general is positive due to increasing demand for agricultural products”1.
According to Farm Credit Canada, the average value of Canadian farmland increased 22.1 per cent in 2013, and in all provinces, farmland values have either increased or remained stable, mainly driven by crop receipts and interest rates.2