Still others wonder where all the money is coming from.
Saskatchewan has the strictest rules in the country when it comes to farm ownership. Only Canadian citizens, permanent residents and 100-per-cent Canadian-owned companies are allowed to hold title to more than 10 acres of farmland. There are some exemptions and it’s not clear if titleholders can be backed by foreign investors. Whatever the case, the province doesn’t do much checking. Saskatchewan doesn’t even keep track of the number of non-residents buying land and officials don’t probe too deeply into how the transactions are financed or whether offshore investors are involved.
“We check basically what’s on the title,” said Mark Folk, general manager of the Saskatchewan Farmland Security Board, which regulates non-resident farmland ownership. “We do some verifications that they comply with residency [rules]. After that it’s a little bit more difficult to follow up farther than that.”
Mr. Folk said the board often requests passports or permanent resident cards from buyers. And in some cases it requires them to sign a declaration that they are the only owner of the land. But officials don’t go much farther to look into any potential offshore arrangements. There’s nothing wrong with a non-resident having a mortgage with a foreign investor, he said, but that investor cannot have an ownership interest in the property.
While the board doesn’t keep statistics about non-resident purchases, Mr. Folk knows they are on the rise. “There’s definitely an increase from non-Saskatchewan residents purchasing farmland in the last couple of years.” However, “we don’t have any information that would lead us to believe that it’s not their own money.”
It’s easy to see why new immigrants, like many other investors, are attracted to Saskatchewan farmland. Prices in parts of the province have climbed more than 20 per cent in the past year to around $2,000 an acre, according to a recent report by Re/Max realty. Over all, the average value of farmland in Saskatchewan increased 9.1 per cent during the first half of 2012, which was above the national average, according to a report by Farm Credit Canada. With grain prices and farm incomes rising, rural land values are expected to keep going up. And yet Saskatchewan’s farmland is far less expensive than comparable property in other provinces, such as Ontario or British Columbia, which have less restrictive ownership rules. Ontario farms go for up to $15,000 an acre while farms in B.C. can sell for as much as $60,000 an acre.
Buying land that’s increasing in value by roughly 20 per cent annually is one thing. But many of these investors are banking on something else too. If the government ever eases its restrictions on foreign ownership, many believe farmland prices will soar. “It’s a really good bet,” says Tim Hammond, a real estate agent in Biggar who has done several recent deals with immigrants from China and India.
Ogema has become something of a focal point for the buying spree. Plopped along a stretch of open prairie near the U.S. border, Ogema has all the trappings of a classic Saskatchewan town; 368 people, a post office, restaurant, hotel, school, arena and a couple of shops. Many farmers in the area have been working the same land for generations, riding the vagaries of weather that can change from drought to flood in a matter of weeks. Land prices for the most part hadn’t moved much in decades.
That changed a couple of years ago when Andy Hu came to town. Mr. Hu, 38, grew up on a farm in China and immigrated to Canada in 2004, launching a commercial real estate business in Calgary. After a few visits to Saskatchewan, he turned his attention to farmland and launched MaxCrop Farm Canada Inc., a Regina-based company that specializes in finding farmland investors among new immigrants from China and South Korea. “I thought [farmland] was very, very undervalued,” Mr. Hu said in a recent interview. “Also at the same time I saw the strong [interest] by new Canadians to own farmland. Sometimes they come from a country where they were not allowed to own farmland.”