Glacier FarmMedia — Farmland is still getting more expensive, but not quite as quickly as in recent years, according to the latest farmland value report from Canada’s biggest agricultural lender.
Farm Credit Canada put average national farmland value growth in 2023 at 11.5 per cent, down from 12.8 per cent in 2022.
“We had three consecutive years of . . . land values climbing. And so we’re seeing a little bit of a pullback,” FCC chief economist J.P. Gervais said. “It’s still double-digit, still a very significant increase.”
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Given global geopolitical events, which have led to significant market volatility in the last few years, Gervais was expecting even more of a pullback.
There was significant variability. Land value growth in some provinces remained above 10 per cent, while British Columbia’s pace actually dipped into the red by 3.1 per cent (although that province also had the highest average land value on a per-acre basis).
The highest average provincial increases in farmland values were found in Saskatchewan, Quebec and Manitoba, with increases of 15.7 per cent, 13.3 per cent and 11.1 per cent, respectively. That’s up from 14.2, 11 and 11.2 per cent, respectively, in 2022.
Rates from other provinces included 10.7 per cent in Ontario (down from 19.4 per cent in 2022), 7.8 per cent in Nova Scotia (down from 11.6), 7.4 per cent in Prince Edward Island (down from 18.7), 6.5 per cent in Alberta (down from 10 per cent) and 5.6 per cent (17.1 per cent in 2022) in New Brunswick.
That’s a change up from 2022, when Ontario, Prince Edward Island and New Brunswick topped the list for the quickest growing farmland values.
The newest report also marked the second year FCC reported on pastureland values. Due to insufficient sales in Ontario, Quebec and the Atlantic provinces, it focused on data from pastureland sales in Western Canada.
The most significant of those were in Manitoba, which saw an average growth of 19 per cent. Saskatchewan recorded a hike of 12.7 per cent, followed by Alberta at 9.6 per cent and B.C. at 7.4 per cent.
It was a generally unaffordable year to buy land, Gervais noted, pointing to the double hit of high interest rates and flagging commodity prices. Actual farmland sales declined slightly from 2022 as producers exercised more caution around investment decisions.
He expects that caution to extend well into 2024 due to continued high interest rates, high input costs and lower grain prices.
In fact, he said, farmland in many parts of the country is less affordable right now than it’s ever been. Fiscal circumstances have also opened up operations to more financial risk.
“It makes it more difficult for young farmers and young operations that have a desire to expand into the industry,” he said.
In the short term, farm receipts of grains, oilseeds and pulses are projected to decline by 13.2 per cent in 2024, in comparison to a 0.4 per cent increase in 2023. Gervais predicted a 4.8 per cent decline in 2024 earlier this year.
He urged producers to action to manage these losses.
“An important part of preparing for inevitable, yet unpredictable, economic changes is not only creating a risk management plan, but also updating it as those shifts in the economy unfold,” he said.
For detailed coverage and regional breakdowns of the latest farmland values report from FCC, see future editions of the Manitoba Co-operator, Alberta Farmer Express, Western Producer and Farmtario.
