Omnigence study links Canadian farmland returns to real interest rates

Omnigence Asset Management published new research on how Canadian farmland has performed across different real interest rate regimes from 1970 to 2025. The paper says farmland appreciation slowed as real rates rose and compares Veripath’s gross unlevered returns with the national market.

Why it matters: - Omnigence’s research argues that long-term real interest rates, not just inflation, may be a better guide to Canadian farmland performance. - The findings matter for allocators weighing farmland as an inflation hedge, a diversification asset, or a return-driven investment. - The paper also places Veripath’s strategy in the context of the broader Canadian farmland market.

What happened: - Omnigence Asset Management published a paper titled Real Rates and Canadian Farmland Returns: The Market versus Veripath Across Rate Regimes. - The study reviews Canadian farmland data from 1970 to 2025. - The paper examines how farmland returns changed across different long-term real-rate environments. - Omnigence is based in Calgary.

The details: - The paper defines real rates as the yield on long-term government bonds after inflation. - The analysis groups the 56-year period into three regimes: negative real rates, real rates between 0% and 4%, and real rates at 4% or above. - Average annual farmland appreciation was 15.2% when real rates were negative. - Average annual farmland appreciation fell to 9.7% when real rates were between 0% and 4%. - Average annual farmland appreciation dropped to 1.2% when real rates were 4% or higher. - Every negative year for farmland prices in the sample occurred when real rates were positive. - All six material drawdowns in the sample happened between 1983 and 1992, and all occurred in the highest-rate regime. - A separate section compares Veripath’s gross unlevered total returns with the national market from 2008 to 2025. - During that period, real rates ranged from negative 4.0% to positive 3.1%. - The paper says Veripath’s margin over the market was widest when real rates were between 0% and 4%. - The paper attributes that outperformance to asset selection and buying land at discounts to average productivity-adjusted prices. - Real rates are currently around 1%, which puts the market in the paper’s middle regime. - The paper says the 4% and above regime has not been seen since 1999. - Stephen Johnston, a director of Omnigence and lead author of the paper, said farmland has often been discussed as an inflation hedge, but long-run data suggests real interest rates are a more useful guide to performance. - Johnston said the research is intended to help allocators consider how the rate environment can shape farmland returns and how asset selection can add to them. - The paper is available on request from Omnigence Asset Management.

Between the lines: - The research frames farmland less as a generic inflation play and more as an asset class whose returns are sensitive to the opportunity cost of capital. - The regime breakdown suggests the strongest historical returns came when bond-linked real yields were negative, while the weakest returns appeared when real rates were high. - The Veripath comparison is meant to show that manager selection may matter even within the same asset class and rate backdrop.

What's next: - Omnigence is using the paper to position current conditions as broadly supportive relative to the high-rate periods in the historical record. - The firm is also inviting investors and allocators to request the full paper for more detail. - Omnigence’s broader platform continues to include farmland, operational private equity and secondaries, with partner funds managing more than $1.2 billion. - Veripath continues to manage more than 140,000 acres of row-crop farmland across Canada.