‘Pinstripes on the prairies’: examining the financialization of farming systems in the Canadian prairie provinces

Abstract

Drawing on recent scholarship on the financialization of agro-food systems and the global land grab, this paper examines new forms of financial investment in agriculture in the Canadian prairie provinces. We examine the factors underpinning investor involvement in the sector, including its anticipated financial performance as well as processes of agricultural restructuring that, combined with government actions to liberalize farmland ownership, have facilitated the enrollment of land and labour into new financial vehicles. We focus in particular on the emergence of two new forms of investment vehicles – farmland investment funds and an exchange-traded farming corporation – comparing the business model and investment strategy of each. In doing so, we highlight the ways in which the new investment patterns may propel the restructuring of the agricultural sector, alter power relations among key actors, and introduce new logics into the farming landscape. Our findings allow us to comment on the relevance of the land grabbing frame for making sense of the financialization of agriculture in the global North.

Keywords:

• financialization
• agriculture
• farmland
• Canada
• prairie
• land grab
• indigenous peoples

Acknowledgements

The authors wish to thank Saturnino (Jun) Borras and three anonymous reviewers for their helpful comments. This research was carried out with the aid of grants from the Social Sciences and Humanities Research Council of Canada (www.sshrc-crsh.gc.ca), the International Development Research Centre (www.idrc.ca), and the Land Deal Politics Initiative.

Notes

¹Land grabbing is a complex phenomenon, related to a number of drivers and mechanisms, including growing global demand for food and fuel, the changing distribution of risks and rewards in agro-food commodity chains, and public policy objectives in both investor and target countries (Cotula 2012). Here, we do not mean to collapse all instances of land grabbing into financialization, but rather to emphasize the ‘elective affinity’ between the two.

²The prairie provinces are Manitoba, Saskatchewan and Alberta.

³Author-derived data, based on Statistics Canada data (Statistics Canada 2014a).

⁴Before 2003, Saskatchewan's Farm Security Act restricted large-scale ownership of farmland to residents of the province. In 2003, the rules were changed to allow Canadian citizens and permanent residents to own Saskatchewan farmland. All three prairie provinces currently prohibit large-scale farmland ownership, and in some cases leasing, by persons who are not Canadian citizens or permanent residents, as well as corporations or other entities that include and/or are controlled by foreign interests.

⁵In certain cases, FIFs may also offer taxation benefits to investors. For example, AgCapita is eligible for inclusion in Registered Retirement Savings Plans (RRSPs), and so offers tax deferral opportunities.

⁶See note 4.

⁷In 2012, Bonnefield attempted to launch a second type of farmland investment vehicle, announcing that it was developing an exchange-traded farmland investment fund, which would function similarly to its limited partnerships but would be publicly listed. However, that project ran into regulatory barriers with securities and farmland ownership officials, and has since been postponed (personal communication, Bonnefield official).

⁸For example, tenants may be required to specify the crops seeded, rates of fertilizer application, pesticides/herbicides used and yields for different parcels of land.

⁹Whereas farmland investment funds operating in other parts of the world have usually combined land ownership and management, such has not, until recently, been the case in North America (HighQuest Partners 2010). Similarly, although property management firms are common for commercial real estate in Canada, there was previously no equivalent for farmland management on the Prairies (interview, Assiniboia corporate official).

¹⁰The CPPIB launched an agricultural investment stream in 2012, with a focus on acquiring farmland in Canada, the US, Brazil, Australia and New Zealand (CPPIB 2013).

¹¹OEF's ‘natural’ beef includes grass-finished and hormone- and antibiotic-free beef.

¹²See note 4.

¹³FIFs own approximately 250,000 acres of the nearly 130 million acres of farmland in prairie provinces. Similarly, at its fullest extent, OEF controlled a further 200,000 acres. Non-family farming corporations account for less than 2 percent of farm operations (Statistics Canada, 2014b).

¹⁴Statistics on the proportion of First Nations-controlled farmland that is actively farmed by First Nations communities and individuals are not readily available. Additionally, a good proportion of prairie First Nations communities are located in the northern forested portions of the provinces, rather than in areas that have traditionally been used for agriculture.

¹⁵In the prairie region, higher (if also more volatile) commodity prices seem to be outpacing increases in production costs, as evidenced by rising farm incomes in recent years.

Additional information

Melanie Sommerville is a PhD candidate in the Department of Geography at the University of British Columbia, Canada. Her research explores the changing geopolitics and political economy of agro-food systems, with a specific focus on the intersection of processes of financialization, agrarian change, land reform and marginalization in Canada and South Africa.

André Magnan is an associate professor in the Department of Sociology and Social Studies at the University of Regina, Canada. His research examines the political economy of local and global food systems, with a focus on the history and politics of grain marketing on the Canadian prairies and changing patterns of farm ownership and control in Canada and Australia. Email: [email protected]