Lack of available farmland for sale is continuing to push land values higher this year, the mid-year farmland values review by Farm Credit Canada (FCC) said. Over 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 at 11.4 per cent and Quebec at 10.6 per cent, the report noted. 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 three 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.
“Limited land for sale has been driving farmland values higher over the last six months,” J.P. Gervais, FCC’s chief economist, said in a news release on the report. “With higher interest rates, elevated farm input costs and uncertainty regarding future commodity prices, producers are being cautious with their investments and capital expenditures.”
The report noted that 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 currenteconomic environment vanishes.
“Purchasing farmland is a very strategic decision for producers,” Gervais said. “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.”