New research from Omnigence Asset Management highlights the significant impact of long-term real interest rates on the performance of Canadian farmland investments. The study, titled “Real Rates and Canadian Farmland Returns: The Market versus Veripath Across Rate Regimes,” spans data from 1970 to 2025 and suggests that these rates may be a more reliable indicator of farmland price movements than inflation alone.
The analysis categorizes the 56-year period into three distinct real interest rate environments, revealing stark differences in annual farmland appreciation. When real interest rates were negative, the average annual appreciation was 15.2%. This figure dropped to 9.7% when rates ranged between 0% and 4%, and further plummeted to 1.2% during periods with rates of 4% or higher. Additionally, the research found that all negative farmland price years occurred during times of positive real interest rates, while significant market drawdowns, particularly between 1983 and 1992, were concentrated in the highest-rate category.
The report also evaluates the performance of the Veripath strategy against the national farmland market from 2008 to 2025. During this period, real interest rates fluctuated between negative 4.0% and positive 3.1%. The Veripath strategy showed its greatest performance advantage over the broader market when real rates were between 0% and 4%, a success attributed to strategic asset selection and acquiring farmland below average productivity-adjusted prices. Currently, with real rates at approximately 1%, the market resides within this middle category, a scenario not seen since before 1999.
Stephen Johnston, a director of Omnigence and lead author of the study, emphasized that understanding the influence of long-term real interest rates on farmland returns is crucial for investment allocators. By providing historical context, the research aims to guide investors in assessing Canadian farmland opportunities amidst current financial conditions.
The findings of this comprehensive study offer valuable insights for those considering investments in Canadian farmland, underscoring the importance of real interest rates as a tool for predicting market performance. The full paper is available upon request from Omnigence Asset Management.
About Omnigence
Omnigence is a Canadian alternative investment platform focused on farmland, operational private equity, and secondaries with partner funds managing over $1.2 billion. The firm targets fragmented, unfinancialized investment theses where scale, operational complexity, or size constraints limit participation from larger participants and therefore value is more compelling.
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