Calgary-based private equity firm AgCapita has launched what it bills as the only fund of its kind focused on acquiring farmland in the Canadian provinces of Alberta, Manitoba and Saskatchewan.
The firm has raised C$3 million ($3 million; €1.9 million) in seed capital for the fund, with a final close expected on $10 million in May.
With rising global food prices, AgCapita investment director Stephen Johnston told PERE the Farmland Investment Partnership was simply responding to simple “supply and demand” dynamics.
Johnston said the firm was targeting Canadian farmland in the provinces in part because of its low cost. However he added that when taken with Canada’s low political risk, “world-class” infrastructure, rising demand for bio-fuels and increasing global demand for food, farmland in Alberta, Manitoba and Saskatchewan represented a “unique” investment opportunity.
“Infrastructure is critical in this industry and Canada has world-class infrastructure which other cheaper markets lack,” Johnston, a former fund manager at Societe Generale asset management, said citing the emerging markets of Brazil and Argentina.
“It’s a very simple macro premise of supply and demand and that supply and demand is balanced on a knife edge,” he said. Canada was the third-largest exporter of wheat, Johnston said, and one of the lowest cost competitors in the world.
According to the firm, the western provinces of Alberta, Manitoba and Saskatchewan have approximately 135 million acres of farmland and produce an estimated 20 million tons of wheat a year. “It’s a pretty compelling story,” he added.