The average price of farmland in Canada, the world’s largest canola grower and one of the biggest wheat exporters, will rise at a slower pace in 2016 amid a downturn in commodity prices.
Growers should prepare for a “possible easing” of farmland values after prices in many key regions rose at a slower rate in 2015, Farm Credit Canada, a government-owned agricultural lender, said Monday in a report. Average values will probably rise between 2 percent and 4 percent in 2016 as ample global supplies of grains and oilseed pressure crop prices, said J.P. Gervais, the chief agricultural economist at Farm Credit Canada.
“For 2016, we do expect rates of increase to come down,” Gervais said in an April 7 conference call with reporters before the report’s release. “Farmland values are still going up at a slower pace.”
The average value of Canadian farmland rose 10 percent in 2015 following gains of 14 percent in 2014 and 22 percent in 2013, according to the report. While many areas of Saskatchewan, Canada’s biggest grower of wheat and canola, saw price increases last year, almost half of the province remained stable or decreased slightly.
Lower commodity prices, late spring frosts that prompted reseeding and rainfall during harvest hurt values.
“Crop receipts will probably fall from levels seen in 2015,” Gervais said. “We think we’re reaching the top of the market, the top of the cycle.”