Canada’s farmland values climbed in spite of impacts from pandemic supply chain disruptions and adverse weather that affected parts of the country, as Farm Credit Canada’s (FCC) Farmland Values Report showed an 8.3-per-cent national average increase in 2021. 

The report, which describes changes in Canada’s farmland values from Jan.1 to Dec. 31, 2021, covers an entire year of disruptions caused by the pandemic, as well as drought that reduced yields across much of the prairies.

FCC reported a 5.4-per-cent national average increase in 2020.

In Ontario, average farmland values increased by 22.2 per cent in 2021, following gains of 4.7 per cent in 2020 and 6.7 per cent in 2019.

“The low interest rate environment and favourable commodity prices seem to have offset some of the many challenges that could have been expected to restrain the demand for farmland and the price producers are willing to pay for land,” said J.P. Gervais, FCC’s chief economist. “It’s a testament to the resilience and business confidence of farm operators who are largely driving this strong Canadian farmland market.”

The largest increases were recorded in Ontario and British Columbia (22.2 and 18.1%, respectively), followed by Prince Edward Island (15.2%), Nova Scotia (12.3&) and Quebec (10%).

Other provinces showed more moderate average increases, ranging from Alberta’s 3.6% to Manitoba at 9.9%.. Saskatchewan recorded an average increase of 7.4%, while New Brunswick showed a 5.2% average increase.

Increases in farmland values reported across the country are as wide and varied as the factors that may have influenced them. Average farmland values have increased every year since 1993, however, increases were more pronounced from 2011 to 2015 in many different regions. Since then, Canada has seen more moderate single-digit increases in average farmland values.

Gervais reminds producers to have and maintain a risk management plan that factors in possible economic changes, ensuring their budgets have room to flex if commodity prices, yields or interest rates shift. They also need to exercise caution, especially in regions where the growth rate of farmland values exceeded that of farm income in recent years.

For more information and insights, visit fcc.ca/Economics.

Source:  Farm Credit Canada March 14, 2022 news release