Omnigence Asset Management has published a comprehensive study analyzing the impact of long-term real interest rates on Canadian farmland investment performance. The research, titled “Real Rates and Canadian Farmland Returns: The Market versus Veripath Across Rate Regimes,” investigates the correlation between interest rates and farmland returns from 1970 to 2025, with a focus on the Veripath strategy’s performance compared to the broader market.
The study highlights that while farmland is traditionally seen as a hedge against inflation, long-term real interest rates may be a more significant predictor of farmland price movements. Real interest rates, which are the yields on long-term government bonds adjusted for inflation, influence the competitive landscape for investors allocating capital between bonds and farmland. When real interest rates rise, government bonds become more appealing, potentially affecting farmland investments.
The analysis categorizes the 56-year period into three distinct real interest rate environments and notes significant differences in annual farmland appreciation. Farmland appreciation averaged 15.2% annually when real rates were negative, 9.7% when they were between 0% and 4%, and dropped to 1.2% when rates exceeded 4%. Furthermore, all instances of negative farmland price years occurred during periods of positive real interest rates, with the most severe market downturns happening between 1983 and 1992 in the highest-rate category.
From 2008 to 2025, the study contrasts the Veripath strategy’s gross unlevered total returns against national farmland market performance, during which real interest rates varied from negative 4.0% to positive 3.1%. The Veripath strategy performed best relative to the broader market when real rates were between 0% and 4%, attributed to strategic asset selection and acquiring farmland at below average productivity-adjusted prices. With current real rates around 1%, the market is within this optimal performance range, while the 4%-plus rate environment has not been seen since 1999.
Stephen Johnston, a director at Omnigence and the study’s lead author, emphasized the importance of considering long-term real interest rates over inflation alone when evaluating farmland performance. The study aims to assist investment allocators in understanding how different rate environments impact returns and how strategic asset selection can enhance performance. Omnigence Asset Management offers the paper upon request, providing valuable historical context for investors exploring Canadian farmland opportunities in today’s financial climate.
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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