Saskatchew­an farm­land val­ues con­tin­ued steady climb in 2018 ac­cord­ing to FCC re­port

The Southwest Booster - - FRONT PAGE - FARM CREDIT CANADA

Aver­age farm­land value in Canada con­tin­ued its steady climb in 2018, driven by fewer, but more strate­gic in­vest­ments by pro­duc­ers.

“With the steady rise in farm­land val­ues, pro­duc­ers are mak­ing more strate­gic in­vest­ments,” ac­cord­ing to J.P. Ger­vais, chief agri­cul­tural econ­o­mist for Farm Credit Canada (FCC). “Whether it means pay­ing a higher price for land that has po­ten­tial to be more pro­duc­tive or buy­ing in blocks to im­prove the ef­fi­ciency of their oper­a­tions, pro­duc­ers are sharp­en­ing their pen­cils with an eye on vari­able com­mod­ity prices.”

The aver­age value of Cana­dian farm­land in­creased 6.6 per cent in 2018, fol­low­ing gains of 8.4 per cent in 2017 and 7.9 per cent in 2016, ac­cord­ing to FCC’S 2018 Farm­land Val­ues Re­port.

In Saskatchew­an, aver­age farm­land val­ues in­creased by 7.4 per cent in 2018, fol­low­ing gains of 10.2 per cent in 2017 and 7.5 per cent in 2016.

In all prov­inces, ex­cept for Nova Sco­tia and New­found­land and Labrador, aver­age farm­land val­ues in­creased. Que­bec ex­pe­ri­enced the high­est aver­age in­crease at 8.3 per cent, fol­lowed by Saskatchew­an and Al­berta, both at 7.4 per cent, and Bri­tish Columbia at 6.7 per cent. The rest of the prov­inces were be­low the na­tional aver­age with Prince Ed­ward Is­land’s aver­age in­crease at 4.2 per cent, Man­i­toba at 3.7 per cent, On­tario at 3.6 per cent and New Brunswick at 1.8 per cent.

Nova Sco­tia recorded a de­crease of 4.9 per cent in aver­age farm­land val­ues, while New­found­land and Labrador did not have enough pub­licly reported trans­ac­tions to fully as­sess farm­land val­ues.

Al­though aver­age farm­land val­ues have in­creased ev­ery year since 1993, re­cent in­creases are less pro­nounced than the 2011-2015 pe­riod that recorded sig­nif­i­cant aver­age farm­land value in­creases in many dif­fer­ent re­gions.

Ger­vais said fewer land trans­ac­tions in 2018 is con­sis­tent with a tight sup­ply of land avail­able for sale and a soft­en­ing in de­mand, which is a re­flec­tion of farm in­come lev­el­ling off, vari­able com­mod­ity prices and ris­ing bor­row­ing costs.

Farm op­er­a­tors need to ex­er­cise cau­tion, espe­cially in re­gions where the growth rate of farm­land val­ues sig­nif­i­cantly ex­ceeded that of farm in­come in re­cent years. At the same time, there is still a strong busi­ness case for buy­ing more land, but not with­out care­fully weigh­ing the risks and re­wards, he said.

“There was a strong de­mand from pro­duc­ers for lower-val­ued land, which ex­plains part of the aver­age value in­crease recorded in some re­gions,” Ger­vais said. “It’s a strate­gic in­vest­ment that can pay off if the op­er­a­tion is able to ex­tract more from that land and im­prove its over­all ef­fi­ciency.”

FCC’S Farm­land Val­ues Re­port highlights aver­age changes in farm­land val­ues – re­gion­ally, provin­cially and na­tion­ally. This year’s re­port de­scribes changes from Jan­uary 1 to De­cem­ber 31, 2018 and pro­vides a value range in terms of price per acre.

Ger­vais will present the data and what it means in a Face­book video on May 3. To sign up for the video or view the 2018 FCC Farm­land Val­ues Re­port and his­tor­i­cal data, visit fcc. ca/farm­land­val­ues.

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