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When you think of Canada, you may picture bacon, ice hockey, or even the famed Niagara Falls.
However, one of Canada’s greatest assets is its land, a plenitude that supports a thriving agricultural base. In Canada, approximately 675,000 square kilometers of land are dedicated singularly to agriculture.
Little known fact: Canada is one of the largest agricultural producers and exporters in the world.
From sun-dappled fields of grain to lush fruit orchards to summer produce in the valleys, Canadian farmland is in abundance.
Canada has a deep well of natural water sources available, and has even benefited from climate change, which have brought on longer growing seasons supporting higher value crops.
Canada has a stable history of farmland appreciation, driven by two factors that will continue to come into play: upward trends in physical yield and the ability to plant more profitable crops.
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Should You Invest In Canadian Farmland?
Farmers know that their greatest challenge is access to capital. They need to replace aging equipment, shore up property, buy seed, build irrigation systems, pay for labor at harvest time.
When money is funneled into farmland, the results can be astonishing. Land will be better utilized, crops will flourish and there will be greater profit across the board.
So what’s the hook for investors? Farmland is profitable.
Since the early 1990s, farmland has shown a profitable return every single year. The USDA says that farmland brings an average annual return of 11.5%. Take a look at its track record, and you will see that farmland outperforms all other asset classes, including real estate.
Investors also have other benefits along with this well-above average return. Farmland returns have been found to have low volatility when compared to other assets such as U.S. Treasury Bonds.
What’s more, farmland returns usually do not move with the ebb and flow of the stock market. This type of land has been known to thrive in profitability even in years where the market has seen downward freefalls.
As world population continues to veer off the charts, there are more hungry mouths to feed. This means there will be a steadily increasing global demand for food sources, including crops ranging from wheat to corn to apples.
In sum, farmland is a solid investment, and demand for agricultural products will only rise in the decades ahead.
How To Invest In Canadian Farmland
So, you've decided you need to get involved and participate in farmland growth. However, purchasing a farm isn't exactly what you had in mind. Unlike stocks, ETFs, and mutual funds, farmland isn't something you just purchase through a brokerage account.
What is the solution? Fortunately, there are a few platforms with this exact purpose in mind.
In this article, we will highlight 3 platforms that allow investors to participate in the growth of farmland without ever leaving their house!
1. AGinvest Farmland Funds
AGinvest Farmland Funds was formed to raise capital to buy, optimize and manage premium Ontario farmland. AGinvest works with progressive farm operators using a grower’s agreement to generate reliable annual income.
AGinvest founders come from a farming background and use this hands-on knowledge in every aspect of the company.
The company targets farmers primarily in Southwestern Ontario because the region has:
- A long frost-free growing season with ample heat for growing 200 plus staple crops
- Consistent rainfall throughout the growing season (little need for costly irrigation)
- Access to unlimited fresh water supplies through most of the Great Lakes basin
- Deep and rich soils deposited in the region during the last glacial period
- Exceptional logistics and infrastructure that can quickly access ports to the global market
- Highly educated workforce able to plan and manage farm operations efficiently
- Major urban markets in the surrounding areas that require fresh market produce
- Must Be a Canadian citizen or permanent resident of Canada
- Platform is reserved for Accredited Investors as defined in the Securities Act (Ontario)
- Minimum investment of $150,000 Canadian Dollars
2. Area One Farms
Area One Farms operates private equity funds in the Canadian farmland sector. They partner with established farm operators to buy off-market farmland, helping family farms physically expand and also improve their financial returns. Using a uniquely Canadian model, profits and capital appreciation are shared equally by the farmer and investors.
Joelle Faulkner, founder and CEO of Area One Farms, is a multi-generational Canadian farmer. The Faulkner family owns and operates London Dairy Farms, London Dairy Supply, London Dairy International, ProRich Seeds, and Sequin Farms.
Headquartered in Toronto, the company has $450 million in committed and invested capital and is in the process of closing its fourth round of fundraising – none of which have reached its 10-year investment horizon yet. The company currently has 24 farm partners in Ontario, Manitoba, Saskatchewan and Alberta.
The company has a mission to make high-impact investments into farmland in the most sustainable way while focusing on adding value. They carry out this mission by forming equity partnerships with top-performing Canadian farmers.
Among their goals are to:
- Acquire land, machinery, and related supplies to achieve optimal scale
- Improve land to maximize productivity, add value, and sustain assets
- Manage farms to increase profitability
The company brings committed investors and innovative farmers together to invest in land and grow farms in a way that keeps the farmer as an owner.
Area One Farms partners with Canadian farmers – most of them family farms – that are looking to expand. Often, they find adjacent property for sale, perhaps owned by retiring farmers. Once found, the company assists the farmer in buying the land. Investors then become equity owners in the new, expanded farm.
The annual source of income for investors comes from farm production, such as corn, oats, barley, soybeans and other crops. The platform helps pay the farm’s expenses, and then distributes earnings to investors.
A key component in growing income is improving land value, so that the land is worth more than the total of the investment money poured into it.
Area One investors join a network of farm partners, suppliers and vendors, and agricultural researchers, all aimed at helping expand the farm’s profitability.
The company is also eco-conscious. They continue to only invest in areas with 100% water sustainability, and with farmers who are conscious about making good environmental decisions.
- Reserved for accredited investors
- Minimum holding period of 10 years
- Minimum investment of $100,000
- To learn more about Area One Farms, fees, reach out to their investor team
Bonnefield was established to become financial partners with progressive farmers. Investors provide an alternative source of capital to farm families in order to give them money to make their farming business flourish. In return, investors will receive non-correlated, low-volatility, equity-like returns. The company currently has $1 billion in assets under management.
Bonnefield is Canada’s leading provider of land-lease financing for farmers, dedicated to preserving farmland across Canada. They partner with forward-thinking farm operators who embrace technology and recognize farming as a business as well as a lifestyle, and who are interested in long-term working relationships.
Through its lease financing program, Bonnefield has been successful in helping the 100+ farm families they work with. Since 2009, Bonnefield has been creating long-term financial partnerships with Canadian farmers to help them grow, reduce debt, and put in place retirement and succession plans, all while protecting Canadian farmland for farming.
Among their goals are to:
- Promote sound farmland management practices
- Help improve operator efficiencies
- Protect the integrity of Canadian farmland
The company invests in and holds farmland for long-term capital appreciation and income. It offers qualified investors the opportunity to hold Canadian farmland through pooled limited partnerships.
Over the past ten years, Bonnefield has experienced tremendous interest among the investment community in agriculture and farmland as an asset class. Not only are large, sophisticated, institutional investors across the globe evaluating – or already invested in – farmland and agricultural investments, there are also increasing numbers of non-institutional investors. (An institutional investor is a group that pools money to buy securities, real property, and other investment assets. Institutional investors include banks, insurance companies, pensions, hedge funds, REITs, investment advisors, endowments, and mutual funds.)
- Funds are open to accredited institutional and private investors
- To learn more about your eligibility, minimum investments, and other information about Bonnefield, you can reach out by email to [email protected]
Investing In Canadian Farmland: Conclusion
Agriculture is a flourishing cornerstone of Canada’s economy. As of 2018, there were nearly 270,000 jobs in farming. Canada is a top exporter of agricultural products in the world. These exports were worth more than $60 billion in 2018.
Among Canada’s top agricultural products are canola, beef and veal, vegetables, grains and poultry. Canadian companies export crops, meat, maple syrup and hundreds of other food-related products.
For investors, farmland represents a smart addition to a diversified portfolio. Farms are a tangible asset that tend to not gain or lose value with ups and downs in the stock market. They are a solid option for earning income, whether that’s from appreciation in the value of the land, or from shares of profits from the annual crop harvesting.
For decades, farmland has proven itself to be a smart investment, faring far better than any other real estate asset. Historically, it simply does not lose value. That’s a win-win for farming families and investors, hand in hand.