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.

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Video: Learning to Wrench From Dad the Hard Way

Harvest is a week out and the farm picked this week to fall apart. The truck needs a battery, the barn curtain's got a problem, and the corn and beans are telling us we're out of time to get it all fixed.

So it's a full day of wrenching. Tork supervises while I get the truck back running, then we're out at the hog barn where one rusted up part has the whole curtain system hung up. Ladder work, cable work, and a little dad-and-son disagreement about the right way to do it. We close it out walking the fields, shelling beans and checking corn, because whether everything's fixed or not, harvest starts when harvest starts.

Chapters: 00:00 Everything breaks the week before harvest 01:00 Tork supervises while I fix the truck 12:30 Out to the barn to find the curtain problem 14:30 One rusty part hung up the whole curtain 20:00 Running the curtain cable from the ladder 24:00 Walking the beans and corn before harvest 26:30 Wrapping up

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