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Provincial farmland purchase laws compared


Written By: Eric Anderson, Oct 16, 2015
From:
16 Oct 2015
National Post - (Latest Edition)
By Peter Kuitenbrouwer Financial Post
 
Land lovers
Agribusiness sector sprouts with Canadian farmland boom
 
 
Residential real estate booms in Vancouver and Toronto overshadow another property boom that is underway in Canada: the price of farmland.
 
A hungry planet with a growing population needs food. Canada has lots of space to grow it, and that makes the country’s farmland more and more desirable.
 
Figures from Farm Credit Canada show that the value of farmland rose 14.3 per cent in 2014, and 22.1 per cent in 2013. The boom hasn’t gone unnoticed. The Canadian Pension Plan Investment Board made waves in 2013 when it bought about 50,000 hectares of Saskatchewan farmland.
 
Anyone wanting to get in on this action should be forewarned: several provinces in Canada have very restrictive rules on trade in farmland, to preserve the land for the next generation of local farmers. Small wonder, then, that the inaugural edition of Chambers Canada ranks lawyers and firms in a new practice area, agribusiness.
 
In 2013 Quebec strengthened its 1979 Loi sur la protection des terres agricoles du Quebec, a law to protect farmland. The new rules require the commission to examine the impact of foreign bids for farmland on the price of farmland and the economy of the region. And the commission can permit a maximum of 1,000 hectares of Quebec farmland a year to fall into foreign hands. Even that is an illusory goal: the commission so far this year has granted applications for only 31.42 hectares.
 
“In a world that needs more food and energy, agriculture has become more of a focus,” says Danielle Drolet, a lawyer in the Quebec City office of McCarthy Tétrault LLP. The firm is ranked Band 2 for agribusiness in Chambers Canada.
 
“The new act is more challenging and it takes a long time,” Drolet adds. The commission this month granted an application she made in December 2013. “I think it’s really important to maintain the opportunities for the next generation but at the same time we should have reasonable access to farmland, if it is for farming.”
 
After the CPPIB land grab, Saskatchewan ordered a review of rules on purchase of farmland by non-residents of Saskatchewan.
 
“Nobody contemplated that they would be buying up the quantity of farmland that they did,” says Jeff Grubb, who works in the Regina office at Miller Thomson LLP. The firm has a Band 1 ranking for agribusiness. “The price of farmland in Saskatchewan was a bargain and people were saying, ‘ We want to get in on that.’
 
“In the last 10 years a number of parcels of land have sold to Chinese and Indians,” adds Grubb, who has represented buyers at the province’s Farmland Security Board. “They will send people who will take up residency.”
 
His advice to farmland shoppers: “Get your Canadian citizenship and away we go.”
 
British Columbia and Ontario have no restrictions on foreign buyers of their farmland. Wendy Baker, in the Vancouver office of Miller Thomson, instead deals with clients who seek to remove farmland from B.C.’s Agricultural Land Reserve. In May the B.C. government fired Richard Bullock as chair of its Agricultural Land Commission, and replaced him with former Saanich mayor Frank Leonard.
 
“The commission was very interested in maintaining the integrity of the ALR,” Baker says, adding that she does not know yet whether the new management will be more permissive, as Bullock has suggested.
 
Along with farmland, foreigners show increased interest in farm operations. Bruce King, a lawyer at Pitblado LLP in Winnipeg, represented an Asian entity that bought “a significant portion of a significant hog operation” in Manitoba. Chambers ranks Pitblado as Band 3 for agribusiness.
 
In Manitoba, non-residents and foreign entities may own only up to 16 hectares of farmland; King says that on one hand, those rules make sense.
“The rule came in place when people asked, ‘How are the sons and daughters of Manitoba farmers going to be able to own land?’” he says. “But who knows whether that philosophy should exist today? Right now the trend in farms is less family farm. Shouldn’t those people selling and retiring be able to sell at the highest possible price? Perhaps we should let foreigners pay market price, and not just Canadian buyers.”
 
Agribusiness is at the core of what makes Manitoba tick, King says. Grain companies and farm equipment manufacturers represent a great number of jobs.
 
“Manitoba is not boom or bust, it’s just steady as she goes,” he says.
 
Still, agribusiness is big business in every province in Canada. There are mergers and acquisitions, commodities exchanges, foreign investment, financings, and lots of regulation. Which means that there is lots of business for lawyers.
 
“It’s less glamorous than hightech, but people still need advice,” says Karl Delwaide, a lawyer in Montreal at Fasken Martineau LLP who cut his teeth in agricultural law as a Quebec civil servant. Chambers ranks Fasken as Band 2 for agribusiness. “There are a lot of rules. Not very many lawyers in downtown Montreal understand the laws. We represent companies who have difficulties.”
 
The end of the Canadian Wheat Board’s monopoly created many unique opportunities for investment on the prairies, notes Scott Exner, a McPherson Leslie & Tyerman lawyer based for years in Regina, and now based in Calgary. The firm is ranked as Band 2 practitioner for agribusiness.
 
Global Grain Group, or G3, coowned by Bunge Ltd, registered in Bermuda, and a Saudi Arabian company, this year paid $250 million for a 50.1 per cent stake in the Canadian Wheat Board.
 
“The Middle East is looking to invest in Canada to own grain handling facilities for grain to ship to the Middle East,” Exner explains.
 
Exner has helped arrange other major deals; he helped Saskatchewan farmers set up West Central Road and Rail to get their grain to market after the Saskatchewan Wheat Pool went public in the 1990s; West Central sold out to AGT Foods this past summer.
 
“The reason they invested was to keep their community alive,” Exner says.
 
In the end, they did more than just that: farmers who had bought West Central shares for $100 each cashed out at $310 to $340 per share.
 
But anyone investing in farmland or farm operations should have a long-term view, Exner says.
 
“In agriculture you’ll never get 80 per cent return in one year, but you’ll get steady returns.”
 
Band 1 Miller Thomson LLP
 
Band 2 Fasken Martineau LLP Fillmore Riley LLP MacPherson Leslie & Tyerman LLP McCarthy Tétrault LLP
 
Band 3 Blake, Cassels & Graydon LLP Pitblado LLP Stikeman Elliott LLP
 
 
 
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Posted in Farm related news | Tagged with farmland purchasing law legal farmland value | More articles by Eric Anderson


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