Farmland values continue to rise and as producers head into the 2025 growing year, operations will have to take a calculated approach to either expanding their business or even just staying competitive. Farmland values within Canada increased by 11.5% in 2023 and 12.8% in 2022. Farm Credit Canada or FCC reports on these increasing farmland values and will release a full report for the 2024 year expected in March 2025. Justin Shepard is a senior economist with FCC who sheds some light on the rise of land prices over the last few years.
“When we look at Saskatchewan and we look at sales over the last year, we've actually seen fewer sales and that was sort of across the country. As producers, we’ve obviously had interest rates going up as well as commodity prices starting to come down at that. A lot of that is just fewer parcels coming to the market.”
Economic inflation coupled with the ever-rising demand for arable farmland and high interest rates have made farmland values soar within Canada over the last few years. The rising costs of inputs and equipment hasn’t helped as producers feel they need to stretch every dollar as far as possible. Also, bigger producers and corporations with more flexibility and capital are buying large portions of land at premiums that younger or less established producers can’t compete with. Shepard states it’s all about doing what is best for your current operation.
“Each operation is unique and they're at different growth stages as far as the cycle where whether they're an expansion or they're in kind of maintain mode. So, each operation has to consider what their cost of production is, where they're profitable, and whether they are looking to expand into different areas or gain efficiencies. We continue to see strong demand in general, but each operation would have their own set of goals and outcomes that they're looking for when they choose to expand."
As producers head into the 2025 year, they’ll be looking in depth at their operation and responsibly planning for the future to ensure that they’re financially stable to not only support their farm for this year, but for many years to come.
Source : Pembinavalley online