income, elevated input prices and rising interest rates. The demand for farmland remained robust and the supply of farmland available for sale continues to be limited, according to the latest FCC Farmland Values Report.
Farmland values saw the highest increase since 2014 and follow gains of 8.3 per cent in 2021 and 5.4 per cent in 2020.
In Ontario, average farmland values increased by 19.4 per cent in 2022, following gains of 22.2 per cent in 2021 and 4.7 per cent in 2020.
“Challenging economic conditions could have been expected to slow the demand for farmland and the resulting price buyers paid for land in 2022,” said J.P. Gervais, FCC’s chief economist. “But the underlying fundamental factors in the farmland market tell another story.”
FCC estimates that receipts of grains, oilseeds and pulses in Canada have increased 18.3 per cent in 2022, and are projected to grow 9.4 per cent in 2023.
“Higher farm revenues are driving the demand for farmland, but higher borrowing costs and increased input prices are expected to lead to declines in the number of sales in 2023,” according to Gervais.
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 at 11.6 per cent in Nova Scotia, 11.2 per cent in Manitoba, 11.0 per cent in Quebec and 10.0 per cent in Alberta.
British Columbia is the only province to have recorded a single-digit increase at 8.0 per cent, but it is also a market where land values are the highest on average.
“It’s good practice to have and maintain a risk management plan that takes into account possible economic changes,” said Gervais. “When producers ensure their budgets have room to flex if commodity prices, yields or interest rates shift, they’re better off in the long run.” FCC also suggests producers to exercise caution, especially in regions where the growth rate of farmland values exceeded that of farm income in recent years, which was the case in most provinces.
Source: Farm Credit Canada March 13, 2023 news release
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