By Alice McFarlane

Farmland values continue to rise despite pandemic, drought

Mar 14, 2022 | 11:38 AM

MELFORT, Sask. — The price of farmland in Canada continued to climb last year despite impacts from the pandemic, as well as drought that reduced yields across much of the prairies.

The Farm Credit Canada’s (FCC) Farmland Values Report showed an 8.3 per cent national average increase in 2021. In 2020, the national increase was 5.4 per cent.

FCC chief economist J.P. Gervais said low interest rates and strong commodity prices seem to have offset some of the challenges that could have been expected to hurt demand for farmland and the price producers are willing to pay for land.

“It’s a testament to the resilience and business confidence of farm operators who are largely driving this strong Canadian farmland market,” Gervais said.

The largest increases were recorded in Ontario at 22.2 per cent and British Columbia at 18.1 per cent, followed by a 15.2 per cent jump in Prince Edward Island, Nova Scotia at 12.3 per cent and Quebec’s increase of 10 per cent.

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Other provinces showed more moderate average increases with Saskatchewan recording an average increase of 7.4 per cent, Alberta at 3.6 per cent and Manitoba at 9.9 per cent. New Brunswick showed a 5.2 per cent jump in prices.

Gervais said sharp increases are often a result of local market conditions coupled with relatively favourable economic conditions.

“For areas that reported significant increases, strong demand for a limited supply of land played a key role in bumping up values,” Gervais said.

There was an insufficient number of publicly reported sales in Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut to fully assess values.

Gervais said Canada’s agriculture industry is still facing uncertainty, since labour shortages, supply chain disruptions, geopolitical tensions, farm input inflation and incremental interest rate increases are expected this year.

FCC is forecasting that receipts of grains, oilseeds and pulses in Canada will increase in 2022 fueled by strong demand and a tight global supply.

Average farmland values have increased every year since 1993. The increases were more pronounced from 2011 to 2015 in many different regions. Since then, Canada has seen more moderate single-digit increases in average farmland values.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW