A recent report by Saskatchewan’s Provincial Auditor has sparked important discussions about the oversight of foreign ownership of farmland. As a real estate professional specializing in farmland transactions, I welcome this opportunity to reflect on the findings and explore ways to protect Saskatchewan farmland while maintaining the integrity of our agricultural industry.
Key Findings from the Auditor’s Report
The Provincial Auditor of Saskatchewan made ten specific recommendations to the Farm Land Security Board (FLSB) to enhance its regulation of foreign ownership of Saskatchewan farmland:
- Obtain Ownership Declarations from Higher-Risk Purchasers
The FLSB should consistently request and obtain statutory declarations from purchasers considered higher risk, such as corporations registered outside Saskatchewan, to verify compliance with ownership laws. - Collaborate on Regulating Non-Canadian Farmland Leases
The FLSB should work with the Ministry of Agriculture to determine effective methods for regulating and enforcing farmland leases involving non-Canadian entities, as there is currently no central tracking of lease transactions. - Set Timelines for Transaction Reviews
The FLSB should establish specific timeframes for staff to review farmland transactions promptly after they occur to ensure swift identification of non-compliance. - Communicate Sale Requirements and Escalation Procedures
The FLSB should clearly inform non-compliant entities of the requirement to sell farmland in a timely manner and develop procedures for escalating actions, such as fines or penalties, in cases of continued non-compliance. - Develop Performance Indicators
The FLSB should establish performance indicators, such as the number of non-compliant transactions identified, to assess and publicly report on the effectiveness of its regulatory and enforcement activities. - Document Conflicts of Interest
The FLSB should ensure that any declared conflicts of interest are clearly recorded in Board meeting minutes to maintain transparency and accountability. - Update Statutory Declaration Forms
The FLSB should revise its statutory declaration form templates to require proof of permanent residency status, ensuring accurate assessment of purchaser eligibility. - Enhance Monitoring of Compliance
The FLSB should strengthen its processes for ongoing monitoring of farmland ownership to ensure adherence to Saskatchewan farmland laws. - Adopt a Risk-Based Oversight Approach
The FLSB should focus its regulatory efforts on higher-risk transactions and ownership structures to optimize resources and ensure compliance. - Increase Documentation and Tracking
The FLSB should maintain clear and thorough records of decisions and transactions to improve accountability and transparency in its regulatory processes.
Implementing these recommendations is expected to strengthen the FLSB's processes in regulating foreign ownership of farmland, thereby preserving agricultural land for Canadian residents and ensuring compliance with provincial laws.
Strengths of the FLSB
While the Auditor’s report highlights areas for improvement, it acknowledged several strengths in the FLSB's processes for regulating foreign ownership of farmland:
- Qualified Personnel
The FLSB effectively utilizes a team of qualified personnel from the Ministry of Agriculture to oversee farmland ownership, ensuring knowledgeable and experienced decision-making. - Transparency and Fairness
The FLSB demonstrates transparency and fairness in assessing exemption applications and communicating decisions. - Enforcement of Compliance
The FLSB actively identifies cases of non-compliance and has taken decisive action by ordering the disposal of farmland when ownership violates legal requirements. - Source of Funds Declarations
The FLSB requires buyers to declare the source of funds during land transfers, promoting transparency and compliance.
These strengths reflect the FLSB's dedication to protecting Saskatchewan's farmland and maintaining a transparent marketplace.
Realtors' Role in Compliance
Licensed Realtors also play a key role in ensuring compliance with farmland ownership regulations. Under FINTRAC requirements, Realtors must verify the identities of buyers and sellers to prevent money laundering and ensure lawful transactions. If a buyer does not qualify under Saskatchewan’s farmland ownership legislation, we cannot and will not process the transaction, knowing it would contravene the law. The reality is that we rarely encounter non-qualifying buyers attempting to purchase farmland and do not facilitate any non-qualifying transactions.
The Case for Imposing Penalties
One area where stronger action may be warranted is the imposition of financial penalties. The FLSB can levy fines of up to $50,000 for individuals and $500,000 for corporations under The Saskatchewan Farm Security Act. While the FLSB has ordered divestments in non-compliance cases, it has rarely imposed fines.
Imposing financial penalties alongside divestment orders could:
- Act as a significant financial deterrent to illegal ownership.
- Emphasize the seriousness of adhering to farmland ownership rules.
- Reinforce the FLSB’s role as a robust enforcer of legislation.
By imposing fines, the FLSB could send a stronger message that illegal farmland ownership will not be tolerated in Saskatchewan.
Addressing Misconceptions About Foreign Ownership
A significant challenge for the FLSB is combating misconceptions about foreign ownership of farmland in Saskatchewan, many of which are rooted in biases and misinformation. These public narratives often exaggerate the prevalence of foreign ownership, creating confusion and mistrust. Three common misconceptions include:
- “Foreigners Are Actively Purchasing Farmland”
Contrary to public perception, the Provincial Auditor’s report found no confirmed cases of unauthorized foreign ownership. While rare instances may evade scrutiny, such cases are minimal, given the FLSB oversees over 40,000 transactions annually. The robust safeguards in place ensure a high compliance rate. - “Foreign Ownership Drives Farmland Values”
Rising farmland values are primarily driven by factors such as productivity, commodity prices, and competition among Saskatchewan farmers—not foreign buyers. Foreign buyers have become scapegoats in the narrative for rising farmland values. - “Cultural or Linguistic Differences Indicate Foreign Ownership”
Misguided assumptions and biases, such as associating Chinese Canadians with "foreign ownership," perpetuate these misconceptions. These individuals are Canadian citizens, fully entitled to purchase farmland in Saskatchewan under the law. The fact that their first language may not be English or that they are of Chinese descent does not make them "foreigners" as defined by the Act.
By addressing these biases and misconceptions, the FLSB can foster a more accurate and inclusive understanding of farmland ownership, ensuring public trust and a constructive dialogue about the realities of Saskatchewan’s farmland ownership.
Conclusion: A Balanced Perspective on Farmland Ownership
The discussion surrounding foreign ownership of Saskatchewan farmland requires a balanced perspective grounded in facts and free from misconceptions. The Provincial Auditor’s report underscores the importance of continuous improvement in regulatory processes, with actionable recommendations that can strengthen the FLSB’s ability to oversee farmland ownership effectively. At the same time, the report also highlights the FLSB’s strengths in ensuring compliance, maintaining transparency, and protecting Saskatchewan's farmland for its agricultural community.
Farmland ownership in Saskatchewan is well-regulated, and the system is largely effective, as evidenced by the minimal instances of non-compliance among tens of thousands of transactions each year. Public narratives about foreign ownership, often fueled by biases and misinformation, detract from meaningful dialogue about the real factors influencing farmland values and ownership. Realtors, the FLSB, and the agricultural industry all have critical roles in ensuring compliance and fostering informed discussions. Together, these efforts will help preserve the integrity of Saskatchewan's agricultural land while promoting trust in the regulatory system. By addressing misconceptions and implementing improvements, we can continue to protect this vital resource for future generations and support the province's thriving agricultural economy.
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