Jeremy Welter is worried about the regulations that govern foreign purchasing and ownership of land.
“The biggest concern is, it doesn’t seem like there’s enough teeth in the current legislation,” said Welter, vice-president of the Agricultural Producers Association of Saskatchewan (APAS).
It’s also something the provincial auditor recently identified as a concern, offering recommendations on how to improve the enforcement of rules for foreign ownership of Saskatchewan land.
Looking at the report, two sections in particular raised Welter’s eyebrows. He noted that the Farm Land Security Board (FLSB) “did not request statutory declarations for nine of 18 purchases made by corporations not registered in Saskatchewan” and the farmland transactions weren’t reviewed by Ministry staff until “about five months” after they occurred. According to the auditor’s report, there have been five occasions since 2020 where four “foreign individuals” were ordered to sell farmland and two orders for a corporation to reduce its land holdings. Non-Canadian entities are allowed less than a combined 10 acres of farmland, according to The Saskatchewan Farm Security Act, but exemptions can be granted.
Provincial auditor Tara Clemett said 140 exemptions have been awarded over the last five years and many of the larger exemptions were given to European companies.
The crux of Welter’s concern is the extent to which Saskatchewan farmland is being sold for profit by out-of-country entities “that may not have the best interests of the local community or even the local land at heart.”
“Whether it is a farmer or an investor, they are now viewing land as an asset class to get rich off of speculation, not the productive capability of that land.” Saskatchewan’s registration model for land titles requires the FLSB to review purchases after the land is sold. Looking east and west, both of Saskatchewan’s neighbouring provinces require an “assessment before finalization of the land title change. This key difference creates challenges for the Board,” wrote the auditor.
In terms of impact to Welter and other farmers, he said foreign ownership is seen as one of many factors driving up land prices in Saskatchewan — a possibility identified by the auditor.
“If a foreign entity inappropriately purchases farmland, the (Saskatchewan Farm Security Act) directs these foreign owners to sell the land (in practice within one year),” wrote Clemett. “As Saskatchewan farmland continues to increase in value, owning the land even for a year may create a profit.”
Tyler Case, associate professor at the Edwards School of Business in Saskatoon, says the price of Saskatchewan farmland has increased by 14 to 15 per cent in the past few years. “We have recently seen some significant appreciation of land values,” he said, “and I think that’s what brings the notion of foreign ownership into view.”
According to Farm Credit Canada (FCC), from Jan. 1 to Dec. 31, 2023, the annual change in cultivated farmland values increased 15.7 per cent. At mid-year, FCC reported that “Saskatchewan’s farmland values keep rising, leading the nation in appreciation. From January to June 2024, the average increase is 7.4 per cent.”
Since 2001, farmland values have increased by more than 1,000 per cent in certain regions. For example, over that timeframe in east-central Saskatchewan, the cost per acre jumped from $244 to $2,700 while land in northeast Saskatchewan has gone from $400 to $3,600.
Although the increase has brought concerns of foreign ownership to the forefront, Case pointed out that inflation, few parcels for sale, steady farm revenues and increases in interest rates are also contributing factors.
“It’s seen as just a really great investment,” he said, adding there’s also the notion that Saskatchewan farmland has been undervalued until recently.
Case believes the current FLSB model isn’t enforcing the rules until after a sale has gone through because it’s a matter of constantly playing catchup. However, the process does allow for a more timely sale of land in a province that sees some 40,000 transactions per year.
“The post-transaction review puts a lot more pressure on the need for enforcement and tracking,” he said. “That might be the big piece of this is just accurate and timely data.”
The Ministry of Agriculture has said “while the legislation provides enforcement tools regarding entities not in compliance, we are exploring options to enhance them.”
Following a recent APAS meeting, NDP Opposition Leader Carla Beck criticized the government’s response to foreign purchasing of Saskatchewan land.
“We have laws against foreign ownership,” she said. “People have concerns those (rules) aren’t being followed, especially with the release of the auditor’s report.”