Omnigence Asset Management has unveiled new research highlighting the link between long-term real interest rates and the performance of Canadian farmland investments. The study, titled “Real Rates and Canadian Farmland Returns: The Market versus Veripath Across Rate Regimes,” scrutinizes farmland data from 1970 to 2025 and compares the Veripath investment strategy’s returns with broader market performance under various interest rate conditions.
Traditionally regarded as a hedge against inflation, farmland’s value may be more closely tied to long-term real interest rates, according to the study. Real interest rates, which are adjusted for inflation, signify the yield from long-term government bonds. When these rates are high, government bonds become more attractive, potentially diverting investment away from farmland.
The research divides the 56-year period into three distinct real interest rate environments, revealing significant differences in annual farmland appreciation. During times of negative real rates, average annual appreciation surged to 15.2%. When rates were between 0% and 4%, appreciation averaged 9.7%, while a rate environment of 4% or higher saw appreciation plummet to 1.2%. Notably, all negative farmland price years coincided with positive real interest rates, and significant market downturns, mainly between 1983 and 1992, occurred during the highest-rate periods.
Focusing on the Veripath strategy, the research compares its performance with national farmland market returns from 2008 to 2025, during which real interest rates varied from negative 4.0% to positive 3.1%. The strategy outperformed the broader market most significantly when real rates were between 0% and 4%, a success attributed to effective asset selection and acquiring farmland below average productivity-adjusted prices. Currently, real rates hover around 1%, situating the market in this middle category, while no 4%-plus environment has been seen since 1999.
Stephen Johnston, a director at Omnigence and the lead author of the study, emphasized that long-term real interest rates provide a more valuable framework for assessing farmland performance than inflation alone. The research aims to guide investment allocators in understanding how shifts in rate environments impact returns and how strategic asset selection can enhance performance. The paper offers historical insights for investors evaluating Canadian farmland opportunities under current financial conditions and 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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