Land prices may be leveling off
After sharp increases in farmland prices over the last few years, a leveling-off is expected to be in the works this year.
Agricultural land prices in Stormont-Dundas-Glengarry ranged from $7,000 tp $17,000 per acre last year, reflecting a province-wide trend.
According to Farm Credit Canada calculations, Ontario farmland prices jumped 30.1 per cent in 2012 and by 15.9 per cent in 2013.
For 2014, the increases were more moderate, ranging from five to 10 per cent. Farmers sell $15 billion worth of land each year in Canada. Low interest rates and higher commodity prices have fueled the spikes in land values. When times are good, producers have money on hand to buy more acreage.
But rising prices have given rise to concerns about young farmers entering the field, especially when they would have to spend as much as $1 million for a decent-sized operation.
With the average age of farmers being 60, about 50 per cent of land assets will be transferred in the next five years. Of the retiring farmers, 75 per cent of them don't have successors. Organizations, such as the National Farmers’ Union, have been pressing for more restrictions on foreign ownership of property.
The government has been pressed to enact legislation wherein farmland can only be owned by individuals who reside in the province in which the land is located, or by incorporated farming operations owned by individuals who reside in the province.
In Québec, non-residents must seek authorization from the Commission de protection du territoire agricole du Québec to acquire more than four hectares (or about 10 acres) of farm land.
Due to land price increases, a new producer would have to spend at least $1 million to get started.