Rising Land Values Lift Canadian Farm Equity

Jun 24, 2022

Boosted by rising farmland values, Canadian farm equity saw its largest increase in eight years in 2021.

A Statistics Canada report on Thursday pegged national farm equity as of the end of last year at $627.2 billion, up 10% on the year and the sharpest percentage increase since 2013.

The value of total farm assets rose by 9.4% to $748.6 billion in 2021, with nearly all the increase coming from gains in the value of farm real estate, which increased $58.4 billion. On the other hand, total liabilities rose 6.4% to $121.4 billion in 2021.

The gain in farmland values – supported by historically low interest rates, high commodity prices and a tight supply of farmland available for sale – more than offset a 7.1% decline in the value of crop inventories to $19.4 billion in 2021, the largest annual percentage decrease since 2014.

Although most principal crops commanded higher prices on the market in 2021, the sharp decline in stocks, a result of drought in much of Western Canada, led to the decrease in the value of crop inventories, StatsCan said. Saskatchewan experienced the largest decrease in the value of crop inventories, down $1.9 billion to $6.4 billion.

The poultry and livestock inventory value increased 12.2% to $8.8 billion in 2021 because of higher prices for most livestock and supply-managed commodities. All provinces reported gains in the poultry and market livestock inventory value, with Alberta (+$312.7 million) and Ontario (+$260.4 million) accounting for almost 60% of the national increase.

Liabilities increased in every province, led by Ontario, which was up 10.2%. Low interest rates in 2021 may have encouraged farmers to take on debt to finance their businesses, StatsCan said.

Meanwhile, despite the increase in equity this past year, two farm profitability ratios - return-on-assets and return-on-equity - declined to their lowest levels in over a decade. While cash income hit a record high, the drought in Western Canada negatively impacted on-farm inventories, leading to a drop in total net income. As a result, farm businesses generated less profit from their capital, StatsCan said.

Click here to see more...

Video: Is China Buying US Soybeans + USDA Nov 14th Crop Report could be “Game Changing”

After a week of a U.S./China trade truce, markets/trade is skeptical that we have not seen a signed agreement nor heard much from China or seen any details. There are rumors that China is buying soybean futures & not the physical. Trust in Trump?
12 MMT of U.S. soybean purchases by China by year-end is better than 0 but we all need to give it more time and give it a chance to unfold. China did lower the tariffs on Ag and is buying U.S. wheat and sorghum.
U.S. supreme court could rule against Trumps tariffs, but the Trump administration does have a plan B.
U.S. government shutdown is now the longest in history at 38 days.
But despite a U.S. government shutdown we will be getting a USDA November crop report next Friday and it could be “game changing.” If the USDA provides a bullish surprise with lower U.S. corn and soybean yields and ending stocks that are lower than expected both corn and soybean futures will break out above their ceilings at $4.35/bu and $11.35/bu respectively.
The funds continued their selling in live and feeder cattle futures on continued fears that the Trump administration want to lower U.S. beef prices. The fundamentals have not changed, only market psychology has.
Stocks markets continue to worry about a weak U.S. job market, but you can blame ChatGPT for that. In the future, we will have a more efficient, productive and growing economy with a higher unemployment rate until we have more skilled AI workers.
After 34 new record highs in the S & P 500 and 124 new records in the NASDAQ in 2025 we are back to a correction and investor profit taking as AI valuations may have gotten too stretched near-term ahead of NVDA’s 3rd quarter earnings announcement on Nov. 19th. But this is not an AI bubble.
75% of Tesla shareholders approved a $1 trillion pay package for Elon Musk!
It has rained in South America in the last 7 days, but both the American and European models agree that Central Brazil remains dry in the next 14-days!

Republicans introduce bill designed to reduce farm input costs

Degelman launches new product at Canada’s Farm Show