Strong crop receipts in the first half of last year, surging cattle prices and low interest rates drove Canadian farmland values skyward in 2013.
According to Farm Credit Canada's annual farmland values report released this week, land values in Manitoba rose by an average of 25.6 percent for the second year in a row. Nationally, farmland values jumped 22.1 percent in 2013.
"The annual change is the largest increase since FCC began reporting in 1985. The second highest was 19.5 percent in 2012, so the last two years have seen a very strong increase, especially on the Prairies," says JP Gervais, FCC's chief agricultural economist.
Most of the increase occured in the first half of the year, he notes.
"We had strong crop reciepts for the first six months of 2013, before a bit of a cooling off for the last six months, and this is why we say that the increase was mostly reported in the first six months," he says.
Low interest rates remained the other major factor, says Gervais.
"The low interest rate environment continues to allow producers to expand their land base. It leads to more consolidation and allows more producers to capture economies of scale," he says.
Increased optimism in the beef sector contributed to higher land values in some specific regions, such as the Interlake, notes Gervais.
"Strong cattle prices have had an impact for sure, depending where you are," he says. "It's the same thing with the supply-managed sector, if you look at dairy producers who have expanded their land bases as well."
The report notes revenue-generating potential due to oil development put upward pressure on land values in southwest Manitoba.
Source: PortageOnline