A strong and stable agricultural economy is boosting farmland values in Canada. The average value of Canadian farmland increased 8.4% in 2017, following gains of 7.9% in 2016 and 10.1% in 2015, according to the 2017 FCC Farmland Values Report by Farm Credit Canada (FCC).
Canadian farmers are generally in a strong financial position when it comes to net cash income and their balance sheets. This is supporting farmland values, says J.P. Gervais, chief agricultural economist for FCC.
Since 1993, Canadian farmland values have increased every year, but the recent increases are lower than the 2011-to-2015 period. For instance, the year-over-year increase marked in 2012 was 19.5%, and 2013 showed a 22.1% jump in values.
The most expensive farmland, in part due to limited available land and producer demand, is in British Columbia. For 2017, farmland values in the Okanagan agricultural region averaged nearly $92,000 per acre, while the South Coast agricultural region averaged around $89,000 per acre. Meanwhile, the northern/Peace region of British Columbia averaged $1,500 per acre.
In Ontario, the province with the most farms, per-acre farmland values ranged from $3,600 to $17,000.
“It’s important to remember that farmland prices can vary widely within regions due to many local factors that can influence how much value a buyer and seller attach to a parcel of land,” Gervais says.
Some of last year’s increases in farmland values could be a result of timing as most provinces recorded a faster pace of increase in the first six months of the year while interest rate increases didn’t occur until the latter half of 2017, according to FCC. Recent increases in borrowing costs and expectations of further increases could cool the farmland market in 2018, Gervais says.
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