Canadian farmland value gains continued to slow in 2019, even before the current covid-19 pandemic.
According to Farm Credit Canada’s annual Farmland Values Report on Monday, the average value of Canadian farmland increased by 5.2% this past year, the smallest increase in the past decade and well off the highs of 19.5% and 22.1% seen in 2012 and 2013. National gains have slowed the past five years, with values up by 8.4% and 6.6% in 2017 and 2018.
Provincially, Ontario, Quebec and Saskatchewan reported average increases slightly above the national average at 6.7%, 6.4% and 6.2%, respectively, while British Columbia was closest to the national average at 5.4%. Manitoba, Alberta and Nova Scotia had average increases below the national average at 4%, 3.3% and 1.2%, respectively.
The highest provincial increases in 2019 were observed in two of the Atlantic provinces: Prince Edward Island with an average increase of 22.6% and New Brunswick with an average increase of 17.2%. The gains in both of those provinces were at least partially attributed to the potato industry.
Although average Canadian farmland values have increased every year since 1993, the report warned the COVID-19 pandemic – the impact of which is not reflected in this report - makes the current economic environment challenging for farm operations and business owners throughout the entire food value chain.
“Given the uncertainty, I expect farmers, ranchers and food processors to continue being careful with their investments,” said J.P. Gervais, FCC’s chief agricultural economist. He said he is encouraging producers to have and maintain a risk management plan that considers a broad range of possible economic changes, such as variable production, volatile commodity prices or disruptions to global trade.
Outside of the pandemic, Gervais said changes in commodity prices, uncertainty around global trade and some challenging weather conditions, including delayed planting in the spring and a wet, miserable Prairie harvest, likely contributed to the further slowing of farmland value gains in 2019.
FCC’s Farmland Values Report is based on a series of benchmark properties, representative of each area of the country, upon which appraisers estimate market value using recent comparable land sales. The sales must be arm’s-length transactions, and once selected, are reviewed, analyzed and adjusted to the benchmark farm properties.
Source: DePutter Publishing Ltd.
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