Global farmland grab should be resisted

Canada ought to play an increased role in providing guiding policy principles to impoverished nations to prevent it from happening

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Troy Media Business columnist Sylvain Charlebois
Contact Sylvain

INNSBRUCK, Austria, May 14, 2015/ Troy Media/ – Land is a precious asset, for any country. But, just like gold, no one has figured out how to produce more of it.

As farmland prices rise, some Canadian provinces feel compelled to take action. According to Farm Credit Canada’s most recent report, average farmland values in Canada showed a 14.3 per cent increase in 2014, compared to a 22.1 per cent increase in 2013. Farmland in Saskatchewan increased the most in value.

In fact, even though the province already has laws restricting foreign investors from acquiring farmland, Saskatchewan has decided to no longer allow pension plans, administrators of pension fund assets and trusts to purchase land – an interesting move coming from a free-market-happy government.

Farmland grabs could lead to increase in farmland prices

The Canada Pension Plan Investment Board has already registered its concerns about this decision. And given how food security is affecting the entire globe, this issue will certainly not go away soon.

Since the 2008 global food crisis, corporations, funds and governments have had an increased interest in investing in farmland. Subsequently, farmland prices have gone up everywhere.

farmland grab
In many parts of the world, farmland grabs are a real threat to food sovereignty

When looking at farmland price hikes, there is a fine line between enhanced farmland stewardship and pure investment speculation. For the future of agriculture everywhere, the latter is much less desirable, since it frequently leads to land grabs and unsustainable price fluctuations for following generations.

A sense of local ownership and accountability is key in agriculture, since it allows for local agricultural economies to fulfil biodiversity needs.

In many parts of the world, land grabbing is a real threat to food sovereignty. According to the Land Portal’s Land Matrix database, more than 26 million hectares of farmland were purchased by foreign investors, mostly in Asia and Africa. That is more than three times the size of New Brunswick. The underlying intent for these transactions varies from enhancing food security, securing land for biofuels or unclear compensation deals involving governments and corporations. It’s worrisome.

The situation here in Canada is far different. For example, in Quebec, the legislative framework is comprehensive. It requires anyone who wants to purchase land to have stayed in the province for at least 36 to 48 months before the purchase. Even then, applicants are subject to quotas, and requests for land transfers could be denied at any time.

Some provinces, like British Columbia and Ontario, where restrictions on foreign ownership do not exist, could learn a thing or two about Quebec’s approach.

Some groups in Quebec are concerned about land grabbing. Even though there is no basis for that concern, the province recently held a commission on the issue. But since some estimate less than 2 per cent of farmland is owned by groups outside the province, not outside the country, it is safe to say there is little or no speculation happening, and so the entire exercise was pointless.

The notion of high farmland prices certainly speaks to how we can support future rural entrepreneurs. For the sake of wealth creation, farmland prices should and must go up — at a reasonable pace. To give the next generation of farmers a chance, credit shouldn’t become an obstacle for anyone wanting to sustainably use Canadian farmland.

Principles needed to prevent farmland grabs

Farmland management cannot remain unchecked. Any government which opts to overlook such an important component to its agriculture would be deemed irresponsible. Therefore, Saskatchewan should be applauded for its demonstration of concern.

Globally, land grabbing is a problem, and Canada ought to play an increased role in providing guiding policy principles to impoverished nations to prevent it from happening. Developed economies like Canada should also offer some support to countries with questionable legal regimes so they can improve farmland governance practices and prevent abusive behaviours.

Sylvain Charlebois is a board member with the Food Institute at the University of Guelph’s College of Business and Economics. He is on leave at the University of Innsbruck in Austria.

 

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