FCC forecasts modest growth in farmland values

Average farmland values in Canada are showing only modest increases for the first half of 2019 according to a review by Farm Credit Canada.  

 

The national average for farmland values fell from a 6.6-per-cent increase in 2018 to a three-per-cent increase in the first half this year. If this increase holds steady for the remainder of this year, it will be part of a five-year trend of softening growth in average farmland values.

 

“There might be some minor market adjustments along the way, but the days of sharp increases in farmland values have been replaced by more modest growth,” said J.P. Gervais, FCC’s chief agricultural economist. 

 

FCC’s review showed lower increases from 2018 in British Columbia (2.7%), Alberta (1.6%), Saskatchewan (2.9%), Ontario (3.3%) and Quebec (2.8%), while Manitoba (6.2%) showed a slightly higher increase. Publicly reported transactions in four Atlantic provinces have yet to be reviewed and assessed.

 

“Now we appear to be moving into a time of cautious buying, where producers are focusing more on improving productivity and building resilience in their operations,” Gervais said.

 

Most Canadian farms continue to be in a good financial position and the overall farm debt-to-asset ratio remains lower than the 15-year average, so many producers are in a position to purchase land if it’s part of their business plan.

 

“The balance sheet is still strong, but uncertainty in markets and the fact that farmland values have climbed rapidly in the past may be giving some producers reason to pause,” Gervais said. “Others may have already expanded their operations and are now exploring other strategic investments.” 

 

 

Source:  Farm Credit Canada September 10, 2019 news release

 

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Publish date: 
Wednesday, September 11, 2019

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