Omnigence Asset Management has unveiled a comprehensive study examining how long-term real interest rates influence Canadian farmland investment performance. The research, titled “Real Rates and Canadian Farmland Returns: The Market versus Veripath Across Rate Regimes,” spans data from 1970 to 2025 and juxtaposes the Veripath investment strategy against broader market outcomes across various interest rate conditions.
Traditionally, farmland is seen as a robust investment during inflationary times. However, Omnigence’s findings suggest that long-term real interest rates—yields on government bonds adjusted for inflation—may serve as a more insightful predictor of farmland price movements. These rates indicate the inflation-adjusted return on government bonds, and higher rates can make such bonds more attractive compared to farmland, influencing investor decisions across asset classes.
The analysis divides the 56-year period into three distinct real interest rate environments, revealing significant variations in annual farmland appreciation. When real rates were negative, farmland appreciation averaged 15.2% annually. This figure dropped to 9.7% when rates were between 0% and 4%, and plummeted to 1.2% when rates exceeded 4%. Notably, all negative farmland price years occurred during periods of positive real interest rates, while the most significant market downturns, particularly between 1983 and 1992, coincided with the highest rate environment.
The study also evaluates the Veripath strategy’s performance against national market returns from 2008 to 2025, a period during which real interest rates fluctuated between negative 4.0% and positive 3.1%. The Veripath strategy showed its greatest outperformance when real rates were between 0% and 4%, attributed to selective asset acquisition and buying farmland below productivity-adjusted market prices. With current real rates around 1%, the market is positioned within this middle category, and rates above 4% have not been seen since 1999.
Stephen Johnston, director of Omnigence and lead author of the research, emphasized that understanding long-term real interest rates offers a more effective framework for assessing farmland performance than relying on inflation indicators alone. He highlighted the research’s intent to aid investment allocators in comprehending the impact of varying rate environments on returns and the role of asset selection in enhancing performance.
The findings offer valuable historical context for investors evaluating Canadian farmland opportunities under present financial conditions. For those interested, the full research 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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