Renting Farmland Brings Strong Cash Flow Advantage

Apr 22, 2025
By Jean-Paul McDonald
Assistant Editor, North American Content, Farms.com

Stable rent price boosts profits while land values grow

Farm Credit Canada (FCC) has been tracking farmland rental rates and values over the past five years. In 2024, average farmland values rose 9.3%, a slower yet significant increase. Despite this, rental rate trends were more moderate, with Canada’s national rent-to-price (RP) ratio at 2.50%—down from 2.70% in 2020.

The RP ratio is calculated by dividing the rental cost per acre by the farmland value per acre. Most provinces maintained steady RP ratios, but Saskatchewan and New Brunswick showed no change, even with high land value increases. Rental agreements tend to lag behind changes in land value.

Renting land has proven to improve annual cash flow compared to buying. Using a model based on a 25% downpayment and 25-year amortization, renting was more profitable per acre across all provinces, except Prince Edward Island (PEI) in 2020.

From 2020 to 2024, rental profits rose in Alberta by $77/acre, in Saskatchewan by $58/acre, and in Manitoba by $95/acre. Ontario and Quebec showed even larger gains, with rent profits increasing by $620/acre and $368/acre respectively. Atlantic provinces also experienced improved cash flow, especially PEI, where rent now gives a $147/acre advantage.

However, owning land brings long-term benefits. Between 2020 and 2024, land values increased by $1,200–$1,500 in the Prairies, and by $6,000–$9,200 in Central Canada. Though renting helped cash flow, owning land led to strong asset growth.

In summary, producers must weigh short-term profitability from renting against long-term gains from owning, based on financial goals and local market conditions.

Photo Credit: istock-alenamozhjer

Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.