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Saskatchewan farmer Larry Spratt looks over some of his calves on his farm near Melfort, SK on November 15, 2010. Spratt and his father Don expanded their farm in a modern version of crop sharing where they farm land bought by investors.

David Stobbe/The Globe and Mail

Bidding wars. Double digit price increases on property in just a few months.

Toronto housing? Vancouver condos? So passé. We're talking Saskatchewan farmland.

And not just Saskatchewan, which is up 9.7 per cent on average according to Farm Credit Corp.'s recently released survey. Alberta is up 7.2 per cent. Manitoba is pushing 14 per cent.

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It's timely then to see another farmland investment partnership arriving on the scene. Agcapita Partners opened its fourth partnership, seeking $20-million to buy land. Agcapita is betting that the price gap between Saskatchewan land and similar land in other grain-growing regions will start to close.

The general thesis on farmland runs along the lines of "they aren't making more, and people need to eat." But farmland is tricky business.

Investors looking at such farmland partnerships need to dig deep and ensure that the people buying the land know what they are talking about, and are not just financial engineers looking at farms like stocks, bonds or another financial asset. Two fields that look a lot alike, side by side, can be worth vastly different amounts. Locals know it.

Land is not created equal. Some is sandy. Some is alkaline. Some floods. Some doesn't. Some produces consistently good crops. Some is marginal, and only economical in good years. Some comes with gas or oil well income that can defray costs. Some of those wells are better than others.

Sometimes a kilometre in any direction makes a big difference.

Are the locals likely to tell a fund representative from out of town that they are overpaying for a quarter section, or just smile and watch a deal go through that gives a neighbour a big cheque, and helps push up the value of all the other land in the area? Food for thought.

(Full disclosure. There's still an Erman family farm back in Saskatchewan – though it's not my immediate family's main business any more. But that's why I pay attention.)

( Boyd Erman is a Globe and Mail Capital Markets Reporter & Streetwise Columnist.)

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