Canadian farmland values continued to trend higher in 2023, even as economic conditions for the agricultural sector turned much less favourable.
Farm Credit Canada’s annual Farmland Values Report on Tuesday showed the nationwide value of cultivated land increased by an average of 11.5% this past year. That is down from the 12.8% increase posted in 2022 but still represents the second highest increase since 2014.
The gain was admittedly surprising, given lower commodity prices, rising interest rates, and tightening farm margins, in addition to last year’s drought which negatively impacted crop production in some parts of Western Canada. But according to FCC chief economist JP Gervais, the simple laws of supply and demand appear to be keeping the Canadian farmland market well juiced.
“A limited supply of available farmland combined with a robust demand from farm operations is driving that growth,” he said.
The highest average provincial increases in cultivated farmland values were observed in Saskatchewan at 15.7%, followed by Quebec at 13.3%, Manitoba at 11.1%, and Ontario at 10.7%. Four provinces had single-digit average increases, including Alberta at 6.5%. British Columbia was the only province where farmland values declined this past year, falling 3.1%.
Amid increasingly dry Prairie conditions, irrigated land values remained pointed higher in 2023 as well, with the largest provincial increase seen in Manitoba at 18.1%, followed by Alberta at 11.7% and Saskatchewan at 3.2%.
Manitoba also led the way higher on pastureland, with a 2023 increase of 19%. Saskatchewan pastureland values increased by an average of 12.7%, with Alberta and B.C. following behind with gains of 9.6% and 7.4%, respectively.
The number of farmland transactions in 2023 is estimated to have declined slightly relative to 2022 as farm operations exercised more caution towards investment decisions, FCC said.
“The expectation of weaker farm revenues and elevated borrowing costs and input prices are expected to stretch out this cautious environment for farmland transactions into 2024,” Gervais said.
According to FCC, receipts of grains, oilseeds and pulses in Canada increased by just 0.4% in 2023 and are projected to decline by 13.2% in 2024.
The full FCC Farmland Values Report, which includes province-by-province breakdowns, can be seen here:
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