February 1, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Canadian alternative investment manager Veripath Farmland Partners has acquired 3,026 acres of farmland in Alberta, Canada, through its Veripath Farmland (UR) Fund, bringing its total portfolios to approximately 110,000 acres. 

Launched in mid-2020 amid the global pandemic, Veripath continues to rapidly grow – operating on the conviction that global demand for agricultural products, including food, feed, fiber, and fuel, make farmland – particularly Canadian farmland with compelling valuation discounts and an ability to hedge both inflation and stagflation – is a prime long-term investment.

This opportunity is approached through funds that incorporate two features that are unique for the Canadian market.

The first is an evergreen structure giving investors control over exactly how long they wish to continue being deployed in the fund. This enables long-term investors, such as family offices or pensions and shorter-term investors such as retail, to gain access to farmland that they seek through the same vehicle.

The second feature is a dual fund structure that divides Canada into two distinct geographies of approximately 84 million acres each: its R Fund invests only in Saskatchewan and Manitoba, while its UR Fund invests in the rest of the country, in order to comply with ownership regulations that vary by province. This structure streamlines, simplifies, and opens the Canadian farmland thesis to a broader universe of investors.

Supporting its premise in regard to the multiple benefits of investing in Canadian farmland, Veripath cited:

Value – Canada is home to some of the most competitively priced farmland among developed nations, especially when viewed on a productivity adjusted pricing basis.

Diversification – Farmland has a low correlation to traditional stock and bond markets, providing an ideal mechanism to improve portfolio risk diversification.

ESG – Zero-till portfolios centered on Western Canada capture material amounts of carbon.

Demand – Farmland is a non-volatile class through which investors can capitalize upon the demands generated by population growth, and the global growing need for food, feed, fuel, and water.

Inflation hedging – Historically, farmland has presented strong hedging capabilities in the face of inflation/stagflation, and has outperformed (in real terms) during periods of low real rates/high inflation.

In addition to these factors, Stephen Johnson, managing director, Veripath Farmland Partners, noted in Canadian Farmland Portfolio Construction – Adjusting For Provincial Variations in Sharpe Ratios, an article published in GAI News in August 2021, “Canadian row-crop farmland investments have had Sharpe ratios materially higher than publicly traded equities and bonds over the last 30 years – meaning they produced much higher average returns over the risk-free rate per unit of total risk.”

These factors, along with the aging demographic of Canadian farmers and the sheer size of the country’s $500 million farmland market, have created a landscape that Veripath is actively, and rapidly leveraging. 

An overview of some recent deals by the investor include: In September 2021, the firm acquired 10,500 contiguous acres of farmland in Alberta, Canada; followed by the acquisition of 2,135 acres of farmland in Manitoba including grain storage infrastructure. Only a matter of months later, in August 2022, Veripath announced it had acquired 4,588 acres of farmland across five rural municipalities in Saskatchewan, and in September 2022, acquired another 1,600 acres of farmland in Alberta. 

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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