Limited availability pushing farmland prices higher
Limited availability of farmland for sale is continuing to push land values higher, according to the mid-year farmland values review by Farm Credit Canada (FCC). In the first six months of 2023, the national average growth rate of farmland was 7.7 per cent.
The highest farmland value increases over the last six months were reported in Saskatchewan (11.4 per cent) and Quebec (10.6 per cent). Ontario and Manitoba saw nearly identical increases, with farmland values in Ontario increasing by 6.9 per cent, and Manitoba by 6.4 per cent. Alberta had a more modest increase of 3 per cent, while the average price of farmland stayed unchanged in British Columbia. Fewer sales were available in Canada’s Atlantic provinces to fully assess mid-year farmland values.
Most regions in Saskatchewan saw farmland values increase by 7-11 per cent, indicating steady demand across the province. The North East region saw the strongest demand, leading to above-average growth relative to the rest of the prairie province. Low precipitation has increased the appeal of heavy clay soils for moisture retention.
“Limited land for sale has been driving farmland values higher over the last six months,” said J.P. Gervais, FCC’s chief economist. “With higher interest rates, elevated farm input costs and uncertainty regarding future commodity prices, producers are being cautious with their investments and capital expenditures.”
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.
“Purchasing farmland is a very strategic decision for producers,” said 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.”
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