Farm Credit Canada released their 2020 report showing strong farmland values
The 2020 Farm Credit Canada (FCC) Farmland Values Report shows a 5.4 per cent increase for the average farmland values in Canada.
The report showed two main drivers behind the strength of farmland values: increase in farm cash receipts and historically low interest rates.
“Some of the underlying drivers that apply to all provinces are strong income, especially when it comes to grains and oil seeds and pulses, cash crops,” said J.P. Gervais, FCC’s vice-president and chief agricultural economist.
“We look at the average borrowing costs in Canada in 2020. It came down all the way down to 2.25 per cent. So, historically low when it comes to average borrowing costs that businesses face,” he told Farms.com.
For Western Canada, Alberta’s farmland value was 6 per cent in 2020, which is an increase compared to 3.3 per cent in 2019.
Saskatchewan’s farmland was 5.4 per cent in 2020, which is a decrease compared to 6.2 per cent in 2019. The province did have some regions with higher percentage of change, however, such as the northeastern region, with 9.1 per cent.
“We've noticed quite a bit of activity in the second half of the year in Saskatchewan and that is related to the run up in commodity prices that we've seen certainly and the positive impact it has had on overall receipts, especially when it comes to grains, oil seeds and pulses,” said Gervais.
Manitoba’s farmland was 3.6 per cent in 2020, which is a small decrease compared to 4.0 per cent in 2019. The province also had regional differences that ranged from -2.9 per cent in the Parkland and 11.6 per cent in the Interlake region.
“We've seen some regions that have recorded some increases in land values… we (also have) Parkland at a little bit of a decline. So, those things need to be considered, but overall, I think it's been a positive year,” said Gervais.
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