What do you think about Assiniboia Capital Corps sales pitch that you could sell your land to them, take the money to buy machinery and inputs and renting more acres from them allowing you to farm in a big way.
Are you better to farm 5000 acres of your land or rent 25,000 acres.
http://www.producer.com/Print.aspx?aid=31771
Investment pools offer new land lease options
By ED WHITE, Winnipeg Bureau
27/01/2011 12:00:00 AM
BRANDON — Farmers don’t need big acres to farm big, a Saskatchewan farmland investment fund operator told producers at Manitoba Ag Days.
In fact, they don’t even need to own farmland.
“I want you to separate the act of farming from the ownership of land in your mind,” said Brad Farquhar, who runs Assiniboia Capital Corp.
He said companies such as his are a better way for farmers to expand rather than buying land or renting from neighbours.
“Our objective is to be that longterm land base relationship that you can have. We can be a more stable land base to you than the 17 leases you have with your cousin and your uncle and the widow in town, and whoever else you might rent your land from,” said Farquhar.
Outside investors have poured money into farmland around the world in recent years as the longterm commodities bull market makes investment in commodity-producing land popular, whether it’s for oil and gas wells, gold mines or crops.
Investors such as commodities guru Jim Rogers have helped established investment pools that buy farmland to benefit from a projected strong market in crop prices for years to come.
Some of the biggest investors in farmland have been the governments of countries that import huge amounts of their nations’ food requirements, such as Saudi Arabia and China.
They hope to hedge their exposure to rapid price increases in food by owning farmland and participating in crop production in other regions.
About 40 percent of Saskatchewan’s farmland is rented, and Farquhar’s company must compete with the thousands of other farmland renters in the province.
However, he is also trying to entice farmers to sell their land to him and then rent it back.
“I think it’s an important way to think about how you deploy your capital,” Farquhar said.
“Farming is an inherently capital intensive business and your success is in some part predicated on how you deploy your capital and whether you do it well.”
He said it makes more sense for a farmer wanting to expand to save his money for inputs and operating expenses than it does to invest in farmland and equipment.
Farmland and equipment can be leased at a small fraction of the cost of purchasing, he added.
“It’s a land opportunity for our investors and it’s an opportunity for farmers to increase their land base without laying out the capital.”
Farquhar said it would take many years for a farmer to expand from 5,000 acres to 25,000 by buying the land, but leased land would allow that expansion to happen much faster.
He said his company rents its land to farmers wanting to expand as well as to farmers who are liquidating assets as they approach retirement. Members of the latter group often sell the land to his company and then lease it back for their final years of farming, he said.
Farquhar conceded in an interview that leasing land is less secure than owning land, but he doesn’t think this should be a worry for conscientious farmers who take care of their soil.
“If our existing tenants have been farming the land well and paying their rent on time, then they’re going to be at the front of the line (when lease renewal time approaches),” said Farquhar.
“In fact, we won’t talk to anybody else. You stay current and you farm well, you can farm this land forever.”
Most of Assiniboia’s lease agreements are for five year terms.
He does some crop sharing with farmers he has known for years, but generally he signs rent leases that require half the rent to be paid in the spring and half in the fall.
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Are you better to farm 5000 acres of your land or rent 25,000 acres.
http://www.producer.com/Print.aspx?aid=31771
Investment pools offer new land lease options
By ED WHITE, Winnipeg Bureau
27/01/2011 12:00:00 AM
BRANDON — Farmers don’t need big acres to farm big, a Saskatchewan farmland investment fund operator told producers at Manitoba Ag Days.
In fact, they don’t even need to own farmland.
“I want you to separate the act of farming from the ownership of land in your mind,” said Brad Farquhar, who runs Assiniboia Capital Corp.
He said companies such as his are a better way for farmers to expand rather than buying land or renting from neighbours.
“Our objective is to be that longterm land base relationship that you can have. We can be a more stable land base to you than the 17 leases you have with your cousin and your uncle and the widow in town, and whoever else you might rent your land from,” said Farquhar.
Outside investors have poured money into farmland around the world in recent years as the longterm commodities bull market makes investment in commodity-producing land popular, whether it’s for oil and gas wells, gold mines or crops.
Investors such as commodities guru Jim Rogers have helped established investment pools that buy farmland to benefit from a projected strong market in crop prices for years to come.
Some of the biggest investors in farmland have been the governments of countries that import huge amounts of their nations’ food requirements, such as Saudi Arabia and China.
They hope to hedge their exposure to rapid price increases in food by owning farmland and participating in crop production in other regions.
About 40 percent of Saskatchewan’s farmland is rented, and Farquhar’s company must compete with the thousands of other farmland renters in the province.
However, he is also trying to entice farmers to sell their land to him and then rent it back.
“I think it’s an important way to think about how you deploy your capital,” Farquhar said.
“Farming is an inherently capital intensive business and your success is in some part predicated on how you deploy your capital and whether you do it well.”
He said it makes more sense for a farmer wanting to expand to save his money for inputs and operating expenses than it does to invest in farmland and equipment.
Farmland and equipment can be leased at a small fraction of the cost of purchasing, he added.
“It’s a land opportunity for our investors and it’s an opportunity for farmers to increase their land base without laying out the capital.”
Farquhar said it would take many years for a farmer to expand from 5,000 acres to 25,000 by buying the land, but leased land would allow that expansion to happen much faster.
He said his company rents its land to farmers wanting to expand as well as to farmers who are liquidating assets as they approach retirement. Members of the latter group often sell the land to his company and then lease it back for their final years of farming, he said.
Farquhar conceded in an interview that leasing land is less secure than owning land, but he doesn’t think this should be a worry for conscientious farmers who take care of their soil.
“If our existing tenants have been farming the land well and paying their rent on time, then they’re going to be at the front of the line (when lease renewal time approaches),” said Farquhar.
“In fact, we won’t talk to anybody else. You stay current and you farm well, you can farm this land forever.”
Most of Assiniboia’s lease agreements are for five year terms.
He does some crop sharing with farmers he has known for years, but generally he signs rent leases that require half the rent to be paid in the spring and half in the fall.
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