Here’s something you won’t be surprised to hear: real estate inevsting is great. But what you may not know is that Canadian farmland investing is basically magic unicorn dust for your investment portfolio.
Farmland investing in general has only been seeing positive trends because of
- Demographic trends put high demands on farms
- Political support for farmers
- Protection against inflation
- No correlation to the stock market, making it recession-proof
- Near-zero volatility
(You can see the specific details in my broader Farmland investing article)
First of all, Ontario farmland value alone has been increasing by over 10% year over year since the 1950s. The rest of Canadian farmland shares similar appreciation, and that’s just the land.
All that said, I don’t personally know anyone who wants to own a farm. Enter management companies. You invest with them. They support farms with your funds. You get the sweet benefits.
There a few ways to invest in Canadian farmland without actually buying a farm.
- Buy a REIT or an ETF
- Invest in farmland crowdfunding.
In both of these cases, you’re basically buying shares in a company that buys and manages farmland. But they’re quite different.
Farmland ETFs vs Farmland Crowdfunding
There are a few ways to invest in Canadian farmland, but let’s break down a few distinctions. What’s the main difference between a REIT and crowdfunded farm investing?
Farmland ETFs and REITs
- ETFs and REITs are more or less stocks. ETFs can usually be bought through your stock investing platform, and REITs have to be bought through a company directly.
- It’s essentially buying a share of a company that invests in farms – be it agriculture, equipment, land value, etc.
- Since these are basically stock, they’ll still move up and down with the stock market, which kind of negates the recession-protection you get from investing in farmland.
- But on the plus side, they’re pretty easy to buy.
- By getting into farmland crowdfunding, you’re essentially pooling your money to invest in a specific farm and then get a proportional slice of their revenues and equity growth.
What it comes down to for me:
The biggest thing for me is that REITs and ETFs fly around with the stock market. BUT I want to invest in farms to balance out inflation and recessions, so being tied to the stock market kind of defeats the purpose.
On the other side, Farmland ETFs are easy to buy and have a low bar to entry compared to crowdfunded Canadian farmland investing, so I’m not dismissing them outright.
Top Canadian Farmland Investing – Fund
Let’s get this out of the way. Investing in farmland in Canada is WAY less flexible than it is the States.
Since its inception, this fund has done nothing but grow. In fact, since 2008, it only had 3 years with negative returns, and the ETF has quadrupled in value! (From $19.81 in Dec 2007 to $82.87 in Apr 2022)
COW.TO is a Canadian ETF for farmland and agriculture investing. It’s actually traded internationally, and is the best Canadian farmland ETF that I’ve seen. It also goes by iShares Global Agriculture Index ETF, which is owned by Blackrock.
(I like that it’s international because it gives me some options. Who knows if it will be better to not have your money in CAD if you’re into long-term investing.)
How to invest in COW.TO: It’s a fund you can buy through a Canadian investing platform.
|Founded in||Dec 18th, 2007|
|Annual dividend yield||0.86%|
|Historical returns||22.87%/yr since inception, but over 30%/yr in recent years.|
|Holdings||Nearly 100% in stocks|
Aside from COW.TO, there’s not much up here when it comes to Canadian farmland investing. You may want to check out US farmland ETFs, although there are tax issues with investin gin US funds that I’m not a huge fan of
Top Canadian Farmland Investing Platforms
If you want to be a bit more hands-on than just a fund, here are some Canadian farmland investing platforms. Fair warning, the user experience is nothing like their American counterparts.
For each investing platform,
- You have to be an accredited investor (meaning you have to have $1M in cash or have a $200K income.)
- The minimum investment is pretty hefty (From $100K to $150K)
- Stats like average returns and fees, are not transparent for research – you have to contact the managers for that information.
If your investment interests are strictly financial, I’d recommend looking at US farmland and invest with a platform like AcreTrader. If your goals are more patriotic, our top pick among farmland investing platforms is Area One Farms.
Area One Farms
Quick facts about Area One Farms
- $450M invested and committed
- In partnership with farms in 4 provinces covering 140,000 farm acres
- Unique model where profits and capital appreciation are shared by the farmer and the investor.
- Founded in 2013
- Eco-conscious and sustainable company.
Area One Farms is an investing platform in Canada. It feels very Canadian to share the farm with the farmer. It’s sustainable. Their model is to work with farmers through equity partnerships (rather than land) to help them expand theri farms and businesses as well as improve their financial returns.
Your investment income comes from land appreciation, conversion work, farming, and related businesses in a unique model where the capital appreciation and the profits are shared by you the investor and the farmer.
They’re partnered with 28 farms across Ontario, Manitoba, Aleberta, and Saskatchewan, convering 140,000 acres. In an equity partnership, the investor helps the farmer acquire land, machinery, and supplies necessary to maximize profitability and productivity with a commitment to keeping the farmer as the owner.
The downside to this platform though is that it doesn’t have a good online portal like its US counterparts and there’s a $!00,000 minimum investment. That’s a lot, but not as much as you’d pay for a downpayment for a regular house in most Canadian cities. It’s all about perspective.
You also have to be an accredited investor, (meaning you have to prove you have over a million in assets or $200K in income) and commit to a 10-year holding period before you can invest in farmland with them.
They’re not too transparent about their data, so to find out their other stats like returns and fees, you’ll have to contact them directly.
How to invest with Area One Farms: Contact them directly.
Runners-Up in Canadian Farmland Investing Platforms
- $1B in assets under management.
- Investors receive non-correlated, low-volatility returns.
- Has provided lease-financing to over 100 farm famillies.
- Canada’s leading provider of land-lease for farmers.
- Founded in 2009
- Has an “A” rating in UN’s Principles of Responsible Investing
Bonnefield offers lease financing to farmers to help them grow, reduce debt, and protect Canadian farmland. They invest and hold on to farmland for capital appreciation and income.
They are open to accredited investors and institutions, and more information like returns, fees, and other stats can be found by contacting them directly.
How to invest with Bonnefield: Contact them directly.
- $92M under management
- 6400 Ontario Farmland acres (partnered with 25 farms)
- Use “LandShare program” that offers farmers capital, easy liquidity, and options for succession.
AGInvest deals exclusively with Ontario farmland with a mission to protect the integrity of Canadian farmland for future generations as well as achieve scale and becom emore profitable.
They are open to accredited investors who are Canadian citizens and permanent residents. There is a $150,000 investment minimum. To get more insights like stats, fees, and returns, you’ll have to contact them directly.
How to invest with AGInvest: Contact them directly.
Read more about investing in farmland:
Farmland Investing | 5 reasons it’s the secret sauce for your portfolio and the easy way to invest
Farmland ETF and Agriculture ETF. In-depth Review Of Top Funds For Investing in Farms.
TL;DR – Canadian Farmland Investing
- Really, my top recommendation would still be to invest in the US through AcreTrader because they are transparent in their operations, are protected form the stock market, and offer huge returns – as high as 12%/yr.
- If you want to stick to Canadian investing, I recommend the COW.TO fund which you can trade on the stock market (with platforms like Questrade etc.) It has seen impressive growth since it’s inception – it has quadrupled in value from 2008 to 2022.
- When it comes to Canadian farmland investing platforms, our top pick is Area One Farms due to their equity partnership model, however none of the platforms are transparent with their numbers, so you would have to get them by contacting the company.