U.S. versus Canadian prices

The average price for Canadian cultivated farmland was $6,900 per acre in 2025 compared to $8,150 (all figures Cdn$) per acre in the U.S. However, comparing value is a complex calculation, FCC economist Justin Shepherd wrote in an April 15 report.

WHY IT MATTERS: Historically an advantage for Canadian crop producers, your land ownership costs per acre may not be the competitive edge they used to be.

For example, some U.S. farmland sits in zones with warmer climates and much longer cropping seasons, whereas some Canadian farmland stays snow-covered late into spring.

There are also variations in how Canadian farmland values are calculated.

To address this, Shepherd said, FCC calculated farmland value based on crop acres only and compared it to the equivalent U.S. value.

While U.S. cultivated farmland is more expensive, on average, than Canadian, the dollar per acre gap between the two countries has largely stayed similar since 2000.

Canadian land values have seen fairly consistent growth, averaging 8.7 per cent over the past decade, Shepherd said. U.S. growth rates have seen sharp spikes, such as between 2010 and 2015, followed by flat growth (2015 to 2020). The average growth rate for U.S. farmland was 5.6 per cent.

Since 2020, Canadian farmland values have risen faster than those in the U.S.

Canadian versus U.S. farmer revenue from land

Despite higher average land prices, U.S. farmers had a slight advantage over Canadians in ability to generate revenue from their land.

Using both countries’ agricultural balance sheets, Shepherd said FCC calculated the average farm is making mortgage payments on roughly 15 per cent of their farm’s real estate value.

Using the Saskatchewan Ministry of Agriculture’s formula for land investment cost, in 2025 newly-purchased Canadian farmland averaged a cost of $367 per acre. Owned land cost $143 per acre.

Using U.S. interest rates, newly-purchased U.S. farmland costs producers $381 per acre and owned land cost $127.

Last year, cultivated farmland payments accounted for 39 per cent of Canadian farmers’ grain and oilseed cash receipts.

“Meaning for every dollar earned, 39 cents went toward land payments,” Shepherd wrote.

The U.S. average was 33 cents per dollar of revenue.

“Although this calculation doesn’t include income from livestock or other sectors, it demonstrates that land costs as a percentage of grain revenues are comparable between Canadian and U.S. farmers,” Shepherd said.

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The balance sheet of the agricultural sector, released today, gives the total value of all farm equity, assets and liabilities as of Dec. 31, 2023.

The farm sector’s equity reached $784.7 billion in 2023, up $55.1 billion. This builds on two years of double-digit gains, StatCan said.

Every province posted gains in farm equity except British Columbia, which saw a 2.1 per cent decline. Saskatchewan saw the largest increase at 11.5 per cent.

The value of total farm assets reached $923.5 billion, up $62.3 billion from the previous year. Almost all of the increase came from gains in farm real estate value.

Again, only B.C. saw a loss in this category of 2.1 per cent. Ontario posted the largest gain of $19.3 billion or 9.4 per cent.

The value of poultry and market livestock inventories rose nearly 19 per cent, up $2.1 billion to $13.0 billion. The increase is due to higher prices as inventories across most categories were down, StatCan said.

The largest provincial gain was in Alberta, where values were up $1.3 billion.

The value of crop inventories fell 21.6 per cent to $24.1 billion at the end of the year—the first decline in four years. StatCan attributed the decline to lower crop prices and increased crop marketings that led to lower end-of-year stock.

The value of farms’ total liabilities hit $138.8 billion, up 5.5 per cent or $7.2 billion. An $8.3 billion increase in long-term liabilities offset a $1.2 billion decrease in current liabilities.

Total liabilities rose across all provinces.

The interest coverage ratio, which measures farmers’ ability to make interest payments, fell to 3.063 from 5.375 in 2022, indicating a decline in farms’ ability to repay debts. This was the result of lower total net income. However, the ratio is still higher than it was from 2018 to 2021.

Earlier this year, analysts called farmers’ financial position very strong—at least on paper.

At the end of 2023, farms’ solvency ratio (ratio of total liabilities to total assets) was 0.150 and the ratio of liabilities to equity (leverage) was 0.177.

At the end of 2022, the ratio of farmer liabilities to equity (leverage) was 0.180, and the ratio of liabilities to assets was 0.153. Eric Micheels, a professor of agricultural and resource economics at the University of Saskatchewan, called this “a very strong balance sheet.”

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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.”

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.

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The demonstration was organized by the NFU Youth Caucus and Farm Workers’ Working Group. The goal was to demand protection of food sovereignty and help farmers, especially young ones, gain more access to farmland.

Why it matters: Investor ownership represents a major barrier for Canadians to enter a shrinking agriculture industry.

NFU Youth president Jessie MacInnis said young farmers in particular have been feeling the strain of a lack of access to affordable farmland.

“As young people, this is a really critical issue,” MacInnis said. “There are already so many barriers for young people to get into agriculture, and the fact that land prices have risen so much due to the speculative nature of farmland now… that’s a barrier that’s hard for all of us to overcome.”

The demonstration was part of the NFU’s “Lobby Day” ahead of its annual convention, running Nov. 23-25 in Ottawa.

“We’re here today, as one of our lobby asks, to ask the federal government to have discussions with provincial lawmakers to talk about ways that we can actually ban all farmland investment,” she said.

“Essentially, we just want to keep the farmland in the hands of farmers and keep it accessible for young people.”

Ontario farmer Rav Singh said she has had trouble finding land since she began farming two years ago.

“I cannot afford to buy my own land because, again, land prices are increasing.

“We are the next generation of farmers and we are facing a lot of land speculation, the cost of land is rising, which means it is harder for us to start our farms and operate and have job security,” Singh said.

“It’s really important for me to support causes like this, because I would like to continue growing food for as long as I can.”

Singh did not come from a farming background, and lived in the city her whole life before she began farming.

“Up until recently, a lot of people who were farmers were intergenerational farmers. But now, it’s a new wave of people coming in.”

Singh said she thought the wave of young people getting into farming was a way of taking action to build a better future amid concerns about climate change.

Regional board member and Fraser Valley, B.C. organic vegetable farmer Ari Westhaver
said the Agricultural Land Reserve, a provincial designation in B.C. which designates agriculture as the primary use of 4.6 million hectares of land has not done enough to prevent the loss of farmland.

“It’s not preventing investors from buying up farmland,” Westhaver said. “So, while physically it protects farmland from being lost, it does not prevent loss of farmland from farmers into the hands of investors.

“The reason I’m here today as a young farmer is that we’re currently in the midst of a transition crisis, we’re seeing a generational shift where 40 per cent of farmers in … Canada are planning to retire in the next few years, but nobody has a transition plan,” he said.

“The only plan that they have, as deeply indebted farmers is to sell their land for a profit, and the reason they’re able to do so is farmland has been kind of divorced from its productive value, and it’s now something people speculate on.”

The NFU published an open letter ahead of the demonstration outlining its concerns.

“Farmers have the right to determine how their food is produced and need equitable access to productive resources,” the letter read. “Young farmers are up for the challenge. But land speculators and multinational investors are snatching up Canada’s farmland, and with it, our future.”

— Jonah Grignon reports for Glacier FarmMedia from Ottawa.

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Farm groups and lawmakers are concerned that land buys by investors and foreign countries are driving up farmland prices and threatening national security.

Booker’s Farmland for Farmers Act, introduced on Thursday, would ban most corporations, pension funds and investment funds from buying or leasing farmland.

“We must protect farmland from becoming an investment strategy for huge corporations,” Booker said in a statement.

Institutional investors – including Nuveen Natural Capital, a subsidiary of TIAA, and UBS Farmland Investors – own $15.9 billion of farmland, according to the National Council of Real Estate Investment Fiduciaries’ Farmland Index.

Several U.S. senators, including Iowa Republican Joni Ernst and Montana Democrat Jon Tester, have introduced bills in recent months to limit foreign ownership of farmland, citing concerns that adversaries might buy U.S. land to gain influence.

The Senate on Tuesday passed an amendment to the National Defense Authorization Act that would boost federal review of foreign farmland purchases and limit some by China, Russia, Iran and North Korea.

China holds less than 1% of U.S. foreign-owned farmland, according to the Department of Agriculture (USDA). Canada holds 31%.

Jordan Treakle, national program coordinator for the National Family Farm Coalition, said corporate ownership is the more pressing concern for rural communities because of its impact on land prices.

“Most farmers cannot outbid a multinational corporation,” he said.

The average price of an acre of farmland was $3,800 in 2022, a record high and up 75% from 2008, according to USDA data.

Booker hopes to pin his bill to this year’s farm bill, an omnibus package passed every five years that funds farm and nutrition programs, said a staffer.

–Reporting for Reuters by Leah Douglas in Washington.

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Farm Credit Canada’s latest analysis of farmland rental prices says they’re roughly maintaining their traditional linkage, says J.P Gervais, the organization’s chief economist.

“We were curious to see whether that would bring up land rental rates faster,” Gervais said. “Not yet, it appears. Land rental rates seem to be moving roughly at the same speed as land values.”

Why it matters: Understanding the rent-to-price ratio for farmland can help farmers decide whether renting land is a more viable option to free up capital for other needs.

However, there could be a lag in the effect that interest rates are having on the market. “I think we’re going to find out,” Gervais said, but pointed out it could take the better part of this year before it becomes apparent.

Incidentally, he said, while financial markets are predicting a rate decrease as soon as October, he sees that as overly optimistic. “We’ve had a pretty strong labour market, which is sustaining consumer spending,” he said.

“Yes, inflation is coming down, but the economy is still moving forward right now, and a lot of us thought that we would have seen a slowdown already, but we haven’t; the economy is more resilient than everybody expected. I think it’s a bit premature to say that we’re going to get a rate cut as soon as October. I’m starting to doubt even that’s going to happen in December.”

But interest rates are just part of a collection of market pressures affecting rental rates, he said. “There are several economic conditions that impact the cost of renting land in Canada. Land values, the availability of land and its quality can all drive rental prices.”

In mid-April, FCC released its annual analysis of the rent-to-price ratio for cultivated farmland in Canada. Across the country, the rent-to-price (RP) ratio in 2022 was 2.55 per cent, compared to 2.5 per cent in 2021. In Saskatchewan and Alberta, there were slight year-over-year increases. The RP ratio increased to 3.1 per cent and 2.6 per cent respectively, while all other provinces saw decreases.

FCC calculates the ratio by dividing the rental cost per acre by the land value per acre. A ratio trending lower suggests that cash rental rates are appreciating at a slower pace than land values.

Around 40 per cent of Canadian farmland is rented. Typically, renting is less expensive than purchasing, and the lower the ratio, the better the renting option becomes. For young farmers and new entrants, renting is seen as a viable option to free up capital that would otherwise be tied up in purchasing and instead can be put toward financing options for other needs, such as machinery or inputs.

Ultimately, the reason FCC began tracking the RP ratio three years ago was so that it could become a tool to help farmers decide whether renting is the right option for them.

Another important consideration when deciding whether to buy or rent is understanding the relationship between rental rates and cropland revenues. Rental rates as a proportion of crop gross revenues have declined since 2020, but crop input costs have increased significantly, putting pressure on profitability.

“We know that we have lower prices than we had last year,” Gervais said. “So, margins are likely to be lower.” Input costs increased significantly last year but have come down a bit this year.

“I don’t think that the decline is that significant, since, if you look at fertilizer prices, they’ve been trending down, but some of it has already been purchased. The bottom line is, those margins are tighter,” he said.

That said, Gervais warns against making snap decisions based on only a small part of the picture. The decision to purchase or rent land can have long-term implications.

“Do you have your strategic plan in mind? Where do you want to take your farm five years from now? What are the targets you have in mind?” Gervais said. Farmers will sometimes just look at the price differential and interest rates and pull the trigger if their costs per acre can be reduced a little.

While that’s an important factor, he says it shouldn’t be the determining factor. Gervais recommended that farmers stick to their five-year plan and only make decisions if they fit within that plan.

“If you start out looking beyond year one and have that five-year perspective, I think that opens up a bit of a different discussion and maybe different decisions, even facing the same set of numbers,” he said.

The Ontario Agricultural College at the University of Guelph, which surveys and analyzes farmland rents, prices and ratios in that province each year, cautions that rental rates and land values can vary considerably on a given parcel’s specific characteristics, limiting the RP ratio’s use as a guideline.

Also, OAC notes in its most recent survey report, such a ratio doesn’t account for “a host of important factors” such as property taxes and the rate of land appreciation over time — but is nonetheless useful for farmers wanting to compare and assess the returns on a land asset.

“Deciding whether to buy or rent is a strategic decision unique to each producer,” Gervais said. “There is a lot to consider, including interest rates, yields, commodity prices and input costs. Open communication and collaboration between landowners and renters creates a quality, long-term relationship. Matched with a risk management plan and business strategy, producers have the building blocks for success.”

— Don Norman reports for the Manitoba Co-operator from Winnipeg. Includes files from Glacier FarmMedia Network staff.

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Average farmland prices were up 12.8 per cent in Canada in 2022, the largest increase seen since 2014 when the increase was 14.3 per cent. The increase follows gains of 8.3 per cent in 2021 and 5.4 per cent in 2020.

J.P. Gervais, FCC’s chief economist, said the numbers were a little bit of a surprise.

“At this exact same time a year ago, I said that I expected the rate of increase to be smaller than the 2021 rate of increase,” said Gervais. “That was my expectation. Up until very recently, I did not think that we were going to get 12.8 per cent.”

Gervais explained that he had thought that challenging economic conditions would have been expected to slow the demand for farmland, but the picture became clearer in recent months.

“It’s all about supply and demand,” Gervais explained. “On the demand side, we might find it a little surprising that demand remains as strong as it has given high interest rates and high input costs. But the flip side of that is that we’ve had strong receipts as well,” he said, noting that receipts for grains, oilseeds and pulses increased 18.3 per cent in 2022.” And on the supply side, all the data that we collected weighed out to a very tight supply of farmland available for sale.”

The highest average provincial increases in farmland values were observed in Ontario, Prince Edward Island and New Brunswick, with increases of 19.4, 18.7 and 17.1 per cent, respectively. Saskatchewan followed with a 14.2 per cent increase. Five provinces had average increases below the national average: 11.6 per cent in Nova Scotia, 11.2 per cent in Manitoba, 11 per cent in Quebec, 10 per cent in Alberta and eight per cent in British Columbia.  There was insufficient data to fully assess farmland values in other regions of the country.

“We have not yet seen the full impact of higher interest rates on the demand for farmland.” J.P. Gervais. Graphic: Farm Credit Canada

Gervais says there are a few things to note about the data in the report.

Firstly, because the report is based on the calendar year, the effect of the drought on the prairies in 2021 is still acting as a drag on land prices and may explain the difference in increases when compared to Ontario, which didn’t suffer through the drought. But Gervais says not to draw too much from those differences across provinces.  “It’s getting harder to generalize about what’s going on in the marketplace, even within a province,” he said.

The second thing to note is that interest rate increases haven’t yet worked their way through the system. “We have not yet seen the full impact of higher interest rates on the demand for farmland,” said Gervais, noting that the reason for the lag is that people locked in when rates were lower.

Another point Gervais says is worth noting is that land values relative to farm income are as high as they’ve ever been.  “In most, if not all, provinces, we’re getting very near the top of the market ever in terms of the value of land relative to farm income,” he said.

Gervais acknowledges that higher farmland values pose a challenge for young producers, new entrants, and other operations that are looking to expand. What this means for farmers is that a strong risk management plan is critical, especially if they are looking to buy land. “You need to have an elaborate strategic plan for your operation over the next five years and a strong risk management plan that goes with it,” he said.

“Land is more expensive now, relative to income, than it’s ever been,” said Gervais. “The ability to service debt and overall equity in the operation are critical factors of success going forward,” he said. “The good news is that farmland value increases reflect a positive outlook for the demand for agriculture commodities and the quality food we produce in Canada.”

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According to the FCC report, Manitoba’s average farmland values increased by 6 per cent in the first six months of 2022. Alberta values were just behind that at 5.9 per cent and Saskatchewan was just above the national average with an 8.4 per cent increase. The biggest increases were seen east of the Manitoba border, where competition for arable land is strong but supply is limited with Ontario leading the way at a 15.6 per cent increase.

“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,” says J.P. Gervais, FCC’s chief economist.

Interest rates have risen 300 basis points since the beginning of the year. But it’s important to note that more than half of those increases occurred after the dates of the FCC study. In addition, the Bank of Canada has said that more rate hikes are inevitable. So, while the numbers look pretty rosy up until June, the pressure of rising interest rates isn’t over.

Chad Lawley, agricultural economics professor at the University of Manitoba, says that while the FCC report is optimistic, it’s justifiably so – at least for now. “An increase in interest rates is obviously going to reduce demand for farmland,” says Lawley. “It increases risks for those who are already over-leveraged,” he says. But he has little reason to doubt the nuts and bolts of the FCC report, noting the organization has good data and a long track record of tracking farmland value changes. “It looks like the sort of tracking fundamentals that we’d expect.”

Data: Farm Credit Canada

However, Lawley says it’s important to remember that during the 1980s farm crisis, macro-economic forces had a huge influence on the farmland market. “Big increases in interest rates could cause big decreases in farmland prices, or at least they did in the past,” he says. However, he says he’s not ready to predict a repeat of the 70s and 80s. “I don’t know how out of control inflation is going to get, I don’t know where interest rates are going to go, and commodity prices remain strong.”

The 1980 farm crisis occurred at a time when debt was high, inflation was rampant, and interest rates rose dramatically in an effort to control inflation. The crisis saw land values plummet, and farm foreclosures skyrocket.

Gervais says any repeat of that type of scenario doesn’t seem probable in today’s climate. “Nothing is impossible,” he says. “But I don’t think this is likely.” He says there’s little doubt that higher borrowing costs will slow the demand for farmland, but with rising farm incomes, he is quite certain any repeat of the 80s should be avoidable.

“I do think [rising interest rates] are going to slow down the rate of appreciation, but I think the outlook remains optimistic,” says Gervais. “When you think about the 1980s farm crisis, what made it a crisis were not only the high rates but also the low commodity prices,” he says. And, while prices may soften in the future, he believes a crash is highly unlikely. “I have to work really hard to find a scenario in which we’re going to see prices collapse. A lot of things can bring volatility to the marketplace,” he says. “There are some scenarios in which you could see prices coming down, but it’s all about probabilities. And I would say right now, there’s a higher likelihood of prices that remain elevated.”

Nevertheless, Gervais recommends farmers remain cautious and maintain a risk management plan that protects their businesses against unforeseen circumstances like lower commodity prices and higher interest rates.

Farm cash receipts climbed 14.6 per cent year-over-year for the first half of 2022, and with commodity prices remaining strong, receipts are projected to increase 18 per cent for the full 2022, relative to 2021.

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The report, released Monday, shows the average value of Canadian farmland rose 5.2 per cent in 2019 over 2018, the smallest year-over-year increase since 2010, and down from a 6.6 per cent increase in 2018 over 2017.

Despite the more modest lift, “farmland affordability continues to decline relative to farm income,” the Crown farming and agrifood lending agency said in a release.

FCC in this case defines affordability in terms of a price-to-revenue ratio — that is, the average farmland price per acre, against the land’s average expected receipts per acre. And that ratio has been trending up in recent years, FCC’s chief agriculture economist J.P. Gervais told reporters on a conference call ahead of the report’s release.

A year of poor yields or weaker prices can have such an effect, FCC said, and in 2019 “weather challenges made farmland more expensive when measured against actual gross revenues,” pushing the ratio to an all-time high.

Most provinces are in such a situation, FCC said, describing 2015 as the “turning point” year in which the price-to-revenue ratio crossed its 15-year average, in the wake of several years of strong revenue growth — but since then, “the momentum hasn’t slowed to match the moderation in crop receipts.”

Asked about the effect of investor speculation on farmland values, Gervais said the amount of Canadian farmland being sold to investors, who then lease those acres to farmers, remains relatively very small, maybe touching five per cent in Ontario but mostly below that level elsewhere.

Challenging conditions

On a provincial basis, Prince Edward Island and New Brunswick booked the largest increases in average farmland values, at 22.6 and 17.2 per cent respectively. New Brunswick saw increased demand from dairy and potato producers, while P.E.I. showed a growing number of farms approaching the provincially-mandated caps on land ownership.

Ontario, Quebec and Saskatchewan showed increases of 6.7, 6.4 and 6.2 per cent respectively. Ontario and Quebec showed strong demand from supply-managed farms and crop producers, with “very limited” available land in Ontario and “more sustained” demand in regions of Quebec where farmland values had been lower.

Saskatchewan, meanwhile, saw more landlords either put land up for tender or sell to their long-term renters. Sales of “superior quality” land began to level out, but sales of small parcels or lower-quality farmland increased.

British Columbia’s average farmland values rose closest to the national average at 5.4 per cent, with the most notable increases in demand seen on Vancouver Island as well as in irrigated land and vineyard development.

At the low end of the increases in average farmland value were Manitoba (four per cent), Alberta (3.3 per cent) anod Nova Scotia (1.2 per cent).

While Manitoba had established producers in expansion mode, “next-generation” farmers entering the market and landlords selling land to their renters, it also had “challenging weather conditions throughout the growing and harvest seasons.”

Alberta also had adverse weather as well as volatile commodity prices and weaker economic conditions; its farmland values saw their biggest lift in southern Alberta’s potato-growing regions, as more processing capacity opened up in the Lethbridge area.

Nova Scotia’s “modest” average increase followed a 4.9 per cent decrease in 2018 over 2017, with strong demand in the Annapolis Valley and Truro-Shubenacadie regions up against adverse weather conditions, including Hurricane Dorian, as well as weaker crop prices.

Looking ahead

FCC’s report noted that the values it lists reflect the market factors seen in 2019, before the COVID-19 coronavirus pandemic’s onset in 2020. “Any impact from the pandemic will be captured in future reports,” the farm lender said.

Gervais, speaking to reporters Friday, said to the extent that FCC can anticipate the likely effects of the pandemic, its impact on farmland values is expected to be minimal.

The economic slowdown due to the pandemic will create volatility for commodity prices, FCC said. Reduced consumer income may put downward pressure on demand for ag commodities, but if supply chains are disrupted, prices may also face “upward pressures.”

Interest rates are expected to remain low and supplies of available farmland remain limited at best, Gervais said, though it’s also expected that both buyers and sellers will adopt a more cautious approach, possibly resulting in fewer transactions.

However, he added, with the number of farmers in Canada continuing to decrease, more and more assets per farmer are going to be transferred or sold when those farmers leave the industry. — Glacier FarmMedia Network

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That’s according to the annual Farmland Values Report from Farm Credit Canada (FCC), in which the federal ag lending agency on Monday pegged the national average rate of increase for 2018 at 6.6 per cent, down from 8.4 per cent in 2017 and 7.9 per cent in 2016.

J.P. Gervais, FCC’s chief agricultural economist, described the activity in farmland purchases as farmers making more “strategic” investments.

Buying lower-valued land, he said, “can pay off if the operation is able to extract more from that land and improve its overall efficiency.”

Quebec saw the highest average increase in 2018 at 8.3 per cent, with Saskatchewan and Alberta both at 7.4 per cent and British Columbia at 6.7 per cent, FCC said.

Prince Edward Island booked an average increase of 4.2 per cent, Manitoba 3.7 per cent, Ontario 3.6 per cent and New Brunswick 1.8 per cent, FCC said. Nova Scotia saw average farmland values drop 4.9 per cent and Newfoundland and Labrador didn’t show enough publicly-reported land transactions to “fully assess” values.

Of the 51 regions on which the FCC study reported, eight saw an average annual farmland value increase of more than 10 per cent, while eight showed “little or no” annual change and four regions in Nova Scotia and New Brunswick recorded declines.

Fewer land transactions in 2018 track with a tight supply of land available for sale and a softening in demand, Gervais said, reflecting a “levelling off” in farm income, along with “variable” commodity prices and climbing interest rates.

Such factors usually weaken the demand for land “more than what we saw last year,” FCC said, and the relative strength in demand “may have been prompted by the need for efficiency gains made possible by adding acres, especially of less expensive farmland.”

Given the continuing climb in values, FCC said, “now is a good time for producers to review and adjust their business plans to reflect possible pressures on farm income and higher borrowing costs, assess their overall financial position and focus on increasing productivity.” — Glacier FarmMedia Network

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