With the recent financial issues of Broadacre Agriculture, discussed in this space a couple of weeks ago the issue of who owns land in Saskatchewan is back on the front burner for a time.
聽聽聽聽聽聽聽 Broadacre Agriculture is a farming corporation, one which is a model for what many see as the future of farming, even with this particular entities woes.
聽聽聽聽聽聽聽 Broadacre was incorporated in 2010 as a company with a mandate to purchase large tracts of land and exploit the aforementioned economies of scale.
聽聽聽聽聽聽聽 The goal was to farm more than 200,000 acres, but had amassed only 9,000 acres of owned and 56,000 acres of leased land in Saskatchewan, when it filed for protection under the weight of some $14 million in debt.
聽聽聽聽聽聽聽 While some will point to Broadacre鈥檚 need to seek protection from its creditors as a last ditch effort to right its flagging financial situation as a failure of large farms, that is putting too much on the experience of a single entity.
聽聽聽聽聽聽聽 Dozens of manufacturers in North America started out making cars.
聽聽聽聽聽聽聽 There was a feeling they would fail as no mechanical creation no matter how marvelous would usurp the horse.
聽聽聽聽聽聽聽 Most of the early car creators failed, but others grew ever, and ever larger, the biggest remaining today.
聽聽聽聽聽聽聽 The same happened in tractors and even snowmobiles. I can recall in my teen years there were literally dozens of snowmobile manufacturers, but only four remain, all large in scale by comparison.
聽聽聽聽聽聽聽 Farmland is different in that it requires very hands-on management, especially in the compressed time periods of spring planting and fall harvest.
聽聽聽聽聽聽聽 A single farm entity struggles with that as it grows ever larger.
聽聽聽聽聽聽聽 But land ownership does not require owner operation.
聽聽聽聽聽聽聽 Canadian banks have in essence co-owned thousands of acres of land across this country over the years as they put up the money to purchase the land, creating a partnership of sorts with the farmer.
聽聽聽聽聽聽聽 The next logical step is for investors to buy up land, in turn leasing it to one, or more farm operators to actually mange the day-to-day farm operations. The farmer takes on the production risks; the land holding company builds a return it is satisfied with in the lease price.
聽聽聽聽聽聽聽 We are already seeing such processes in place, including pension funds, and similar money pools, taking on land as investment as opposed to the more traditional stock portfolios we have seen in the past.
聽聽聽聽聽聽聽 Certainly smaller 鈥榝amily鈥� farm units remain the primary landowners in Saskatchewan, and across Canada, but there is a trend to non-operator land ownership which is likely to continue as land purchase requires major capital which can often be found in investor pockets more easily than a traditional farmer鈥檚.
