By Andrew Joseph, Farms.com
In its 2021 mid-year farmland values report, Farm Credit Canada (FCC) pointed out that despite a drought in western Canada and continued hiccups to the economic recovery, a combination of robust commodity prices in late 2020 and low interest rates continue to provide a strong demand for farmland and elevated land prices.
The FCC report shows that “across the country, farmland values increased by an average of 3.8 percent in the first half of 2021. During the first half of 2021, the largest increases were in Ontario (11.5 percent), British Columbia (8.8 percent), and Quebec (8.1 percent). The remaining provinces showed increases of less than 5 percent.
“The overall 12-month pace of increase between July 2020 and the end of June 2021 shows a 6.1 percent gain in average farmland values at the national level,” the Report showed.
Provincial trends noted in the Report include:
- British Columbia: Land values increased by an average of 8.8 percent during the first six months of 2021 (an increase of 13.6 percent over the past 12 months)—a significant upswing considering that BC has the highest land value per acre in Canada. The trend has been observed in all regions of the province, but primarily in the South Coast region owing to strong competition between local farmers and non-traditional buyers.
- Alberta: Increases were modest at 3.7 percent over the first six months, due in part to some areas having experienced several poor harvest years in a row. The highest increases were primarily on the lower-priced land, while the higher-priced land was mostly stable.
- Saskatchewan: The average increase of 1.8 percent for the first six months of 2021 and 3.5 percent on a 12-month basis represents its lowest increase for the province in the past 15 years. The last time a 12-month increase of less than 5-percent was observed was in 2006. There is a mixed trend in the province, with the eastern regions seeing increases in values while the western regional values remain stable. Western areas have been experiencing drier conditions for some time.
- Manitoba: Farmland values have increased by 3.5 percent during the first half of 2021, a growth comparable to the increasing rates of recent years within the province. Crops are currently being affected by drought conditions. It will be important to watch this impact on land demand in the second half of the year.
- Ontario: It has seen the largest increase in the country for the first six months of 2021, with an 11.5 percent increase (15.4 percent over 12 months). The midwestern and southeast regions have seen the biggest increases. Buyers from different sectors and a migration of producers from higher-priced to lower-priced area are competing for the limited amount of land on the market. Demand for land on the outskirts of urban centres is also very strong.
- Quebec: Most regions have seen land values continue to increase in the first half of 2021. There is a diversity of buyers in most regions, creating strong competition for the limited amount of land on the market.
- Atlantic Provinces: The level of activity has been relatively low for the first six months of 2021 which explains, in part, the small fluctuation in values. Demand for the potato sector remains strong in New Brunswick and PEI. Demand also appears robust in Nova Scotia from growers of various crops.
For a full look at the FCC report, visit www.fcc-fac.ca.