A farmland management and investment company is launching a new investment fund to help preserve Canadian farmland while increasing its long-term value.

Ottawa headquartered Bonnefield Inc. announced Wednesday the formation of a limited partnership fund targeting long-term investment in Canadian farmlands.

Bonnefield Canadian Farmland LP I offers a source of much-needed capital for Canadian farm operators while at the same time provides for stable long-term growth of capital and annual income for investors, the compny says.

The fund held its initial closing on April 8, and will continue to raise additional funds as required through to December 2011.

The fund purchases and holds Canadian farmland and preserves it for farming-use by leasing the farmland to progressive operators and works with them over the long-term to improve farm efficiency, while preserving the integrity of the land.

“Most farmland in Canada is owned directly or leased from farmer to farmer,” explains Tom Eisenhauer, president of Bonnefield Financial.

“While there is a long and successful history of institutional and high-net-worth investment in farmland in the United States and Europe, farmland is a relatively new and untapped investment asset class in Canada. Bonnefield offers institutional and high-net-worth investors the means to invest in this solid, stable asset,” Eisenhauer says.

Since April 2010, the fund has acquired several farm properties in Saskatchewan and Ontario and several additional acquisitions are pending in Saskatchewan and Manitoba. The partnership’s portfolio is diversified across Canada and across different crops and farm types.

Bonnefield says Canadian farmland has proven to be an excellent hedge against inflation, producing attractive long-term returns that are not correlated with financial markets.

A growing demand for food and declining amounts of arable land worldwide are driving up the value of farmland making it attractive to investors, the company says.

At the same time, farming is becoming more capital intensive. Operators must expand to address today’s economies of scale and remain viable.

The fund bridges the gap between investors and farm operators, helping to create value for investors, increase profitability for operators and preserve farmland for farming, Bonnefield says.

IE