By Alice McFarlane

The price of farmland continues to rise

Oct 5, 2022 | 5:00 PM

MELFORT, Sask. – The value of farmland continues to increase in most parts of Canada.

The Farm Credit Canada (FCC) mid-year review noted prices of agricultural land increased by 15.6 per cent in Ontario, 14.8 per cent in Prince Edward Island, and 10.3 per cent in Quebec. Ontario’s average increase was bolstered by the central regions of the province, where competition for arable land is strong but supply is limited.

Saskatchewan and Alberta have a higher percentage of arable land and saw a slower pace increase in land values. Saskatchewan’s farmland price jumped 8.4 per cent, which was closest to the national average increase of 8.1 per cent.

More modest increases were reported in the rest of the provinces. There weren’t enough transactions in the Yukon, Nunavut, Newfoundland, and Labrador to fully assess farmland values.

FCC chief economist J.P. Gervais said the figures show the strength of the agriculture sector.

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“This healthy farmland market is a good indication there is confidence and optimism in the future of the industry among producers,” Gervais said.

Most land transactions were agreed to prior to the most significant interest rate hikes. The more recent increases will not completely deter some producers from making land purchases that make sense for their operations, according to Gervais.

“Strong farm cash receipts, buoyed by robust commodity prices, have managed to quell some of the profitability challenges from higher interest rates and farm input costs,” he said. “There’s little doubt that higher borrowing costs will slow the demand for farmland.”

Farm cash receipts climbed 14.6 per cent year-over-year for the first half of 2022, although grain, oilseed, and pulse receipts were slightly lower in the first six months. This was expected because of the drought that affected many parts of the Prairie provinces last year.

Receipts are projected to increase 18 per cent for the full 2022, relative to 2021.

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alice.mcfarlane@pattisonmedia.com

On Twitter: @farmnewsNOW