Regulations around foreign ownership of Sask. farmland need better enforcement, auditor finds

The Provincial Auditor of Saskatchewan is recommending that the province improve its system of monitoring sales of farmland to foreign entities.

Auditor Tara Clemett unveiled volume 2 of her 2024 report on Tuesday at the legislature. As part of that report, Clemett and her team looked over the practices of the Farmland Security Board’s processes and made 10 recommendations to Saskatchewan’s Farm Security Act as a result.

The act regulates the amount of land that non-Canadian entities can own or lease in the province. The board, which is made up of six members, is responsible for administrating the act and regulating control of Saskatchewan farmland.

A total of six employees from the Ministry of Agriculture support the board in its efforts.

What qualifies as a transaction is every time a land title change takes place, according to the auditor's report.

Clemett’s team found that board staff reviewed transactions about five months after they occurred.

"Consistently obtaining timely proof of residency and ownership declarations from high-risk farmland purchasers, is critical for the farmland Security Board to appropriately assess whether the purchasers comply with foreign farmland ownership rules and take action," Clemett said, while speaking to reporters Tuesday.

"Effective ownership regulation of provincial farmland helps to preserve farm ownership and operations by Saskatchewan and Canadian residents, and helps to keep farm prices affordable."

• Download the CTV News app to get breaking news alerts sent to your device

Saskatchewan’s system differs from its neighbouring provinces as it is based on looking at farmland transactions after the fact instead of before.

“That does result in some probably efficiency, so the transactions go through quicker, but it does mean if you're going to look at things after – don't take too long,” Clemett added.

Annually, around 40,000 farmland transactions occur each year in Saskatchewan. The average value of a cultivated acre of land in Saskatchewan was $3,443 in 2023.

In the past four years, the board has issued just five orders to sell farmland inappropriately purchased by foreign entities.

Clemett noted that there may be more instances not addressed by the board.

Additionally, the auditor’s team found that the board did not request statutory ownership declarations for nine of 18 farmland purchases the team observed which involved corporations not registered in Saskatchewan.

Additionally, in eight instances according to Clemett, the board has requested ownership declarations but has not received them.

“So, they can't conclude whether or not foreign entities might own the farmland,” she said.

“The board needs to do a better job of making sure that they identify those high-risk transactions and then obtaining those ownership declarations so that they can confirm, do we have Saskatchewan farmland, own their out owned and identify it by foreign entities, and then address it accordingly.”

Among the auditor’s recommendations are that the board set “escalation procedures” including fines and penalties if foreign buyers do not provide documentation that is requested – in addition to the board informing the foreign entities to sell the farmland in a timely manner if the sale was done inappropriately.

Clemett also recommended the board set performance indicators to allow for effective assessment and publicly report on its regulatory and enforcement activities.

“The board also needs to work with the Ministry of Agriculture to determine how to effectively regulate farmland leases as no central tracking of lease transactions currently exists, which reduces the board's ability to effectively enforce farmland lease restrictions,” Clemett explained.

When asked if foreign ownership of farmland is contributing to the rise in land prices producers have noted – Clemett said it is possible, but her team found nothing definitive.

“So obviously, having foreign entities buying Saskatchewan farmland does increase the risk that we don't have Saskatchewan residents that own that farmland, and it could be making prices – yeah, higher than they should be and less affordable for Saskatchewan residents. But nothing definitive,” she explained.

Clemett ended off by saying in addition to her team’s recommendations, the organizations involved should have a conversation on the effectiveness of its current course.

"I would encourage the board to continue to chat with the Ministry of Agriculture and probably the Ministry of Justice to determine if the current model is meeting their needs."