March 20, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

Only a week after announcing a new investment strategy, Veripath Farmland Partners is back on the acquisition trail, announcing its purchase of 640 acres of farmland in Saskatchewan through its Veripath Farmland (R) Fund. 

Launched during the pandemic in mid-2020, Veripath has already amassed a total of 110,000 acres under management on the predilection 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 – a prime long-term investment.

Veripath’s approach is unique in that it takes an evergreen structure, enabling 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.

It also manages its holdings through a dual-fund framework that divides Canada into two distinct geographies of approximately 84 million acres each:

Its R Fund, in which this latest acquisition will be housed, 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 and to offer a streamlined, simplified thesis for investors.

Only days ago, Veripath also announced the launch of an RRSP-eligible (Registered Retirement Savings Plan) farmland investment vehicle – connected to this second UR Fund –  to provide access to the farmland investment class to a broader portion of Canadian investors with a high level of flexibility by including opportunities for both short- and medium-term hold periods running between 1-4 years.

“Based on historical performance data, farmland as an asset class may provide small and medium-sized investors with inflation protection, consistency in returns, and portfolio diversification benefits,” said Stephen Johnston, managing director, Veripath Partners, at the time. 

Johnston explained the benefits of such a strategy to GAI News, saying, “The advantage is that an RRSP eligible fund allows Canadian investors to put a farmland holding into their tax deferred federally regulated retirement pension accounts. Contributions to RRSP are only taxed on gains on withdrawal so they provide a material tax benefit.”

“Our new RRSP-eligible, open-ended investment vehicle allows a broad range of Canadian investors to benefit from farmland’s characteristics and do so in their RRSP accounts.”

Veripath noted that all of these features and vehicles are designed to enable investors to gain exposure to, and capitalize upon, the multiple benefits of investing in Canadian  farmland:

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.

Indeed, Canadian agricultural production is proving to be a winning proposition as farmland in the country has been bucking the real estate trend, seeing prices rise almost 13 percent in 2022 – the largest jump since 2014. 

Strong demand combined with limited inventory have resulted in farmland being able to dodge the fallout from rising interest rates, according to Farm Credit Canada, which noted it has reported consecutive increases in average farmland values in the country for 30 years. 

~ 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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