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Rise in Canadian Farmland Values Slows Down

“Farmland values are still increasing but at a slower pace,” Gervais said during his online interview.That’s true at the national level when you average out all the different provinces.If you think of Ontario and Quebec, we have four years of consecutive increases slowing down, while in Saskatchewan for example, the third consecutive year of rate of growth coming down, so really I think farmland values are cooling off.

FCC’s latest Farmland Values Report shows farmland values increased by an average of 7.9 percent in 2016, compared to 10.1 percent in 2015 and 14.3 per cent in 2014.

“I’m calling this a slowdown because we’ve had 10 amazing years of growth when it comes to farm income,” Gervais added. ”In less than 10 years actually we’ve more than doubled crop receipts and that’s especially true in the prairies.” 

FCC Chief Agricultural Economist J.P. Gervais says what stands out is that, for the third consecutive year, growth has slowed down.

“We’re looking at 2016 now and we don’t yet have the final numbers for 2016 but we know that crop receipts have likely slowed down,” he said.In Saskatchewan, for example, you’re likely to get crop receipts down in 2016 relative to 2015, partly because of some of the production challenges, quality issues, and softer pricing.We did face lower prices on average in 2016 than in 2015, so overall I think we’ve had slower growth when it comes to farm revenues and that slows down farmland value increases. That’s the number one driver.

Gervais says other factors, such as interest rates, also play a role but lower income is the main factor.

Source: Meatbusiness