By Alice McFarlane

Farmland prices surge higher

Oct 5, 2023 | 4:48 PM

Producers continue to struggle to find farmland for sale.

Farm Credit Canada (FCC) released the mid-year farmland values review. In the first six months of 2023, the national average growth rate for the price of farmland was 7.7 per cent.

FCC chief economist J.P. Gervais said limited land for sale has been driving farmland values higher over the last six months.

“With higher interest rates, elevated farm input costs and uncertainty regarding future commodity prices, producers are being cautious with their investments and capital expenditures,” Gervais said.

Farm cash receipts are anticipated to increase 6.6 per cent in 2023. But as farm operations exercise caution in spending, farmland value appreciation is anticipated to slow until the uncertainty over the current economic environment vanishes.

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Purchasing farmland is a very strategic decision for producers. Monitoring farmland price trends can assist in making the best decisions for individual operations, according to Gervais.

“They need to assess whether they can earn enough from the larger land base they’ve acquired and if not, whether other areas of the operation generate enough income to pay for the land. Monitoring farmland price trends can assist in making the best decisions for individual operations,” he said.

Saskatchewan led the country in the average farmland value increases for this first half of the year at 11.4 per cent. Most regions saw increases in the 7 to 11 per cent range, indicating relatively steady demand province wide. The Northeast region stood out with the strongest demand, leading to above-average growth relative to the rest of the province.

Quebec’s farmland sales seem to be undeterred by higher interest rates. The province recorded the second highest growth rate in Canada over the last 6 months, combined with a slightly accelerating pace of increase over the last 12 months. A high degree of variability was observed across regions, with little to no increase in some regions and higher-than-average increases in others.

In British Columbia, on average, the province recorded no change in farmland values, with some growth in one region offset by small declines in another. There’s evidence that elevated land prices coupled with higher interest rates are leading to a slowdown in sales.

Farmland values in Alberta have increased at an average moderate rate in the first 6 months at three per cent. The availability of farmland for sale remains low in this province.

In Manitoba, we are seeing a shift in growth away from the higher-priced land. The Eastman and Central Plains – Pembina Valley regions have the highest average prices and the lowest growth recorded in the last 6 months and the last 12 months.

For Ontario, FCC’s internal database of farmland transactions indicates a considerable decline in the number of sales in the Southern region. There remains a wide range of pricing across the province, with Southwest, Central West and South East regions leading in price per acre.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW