Values of Canadian farmland on average kept rising in the first half of 2008, with a percentage increase of 5.8 per cent over the second half of 2007, Farm Credit Canada said in its latest Farmland Values report.
Based on its list of 245 benchmark properties across the country, the federal farm finance agency said in its report Monday that the latest increase marks the second-highest since 2000, following the 7.7 per cent increase in the second half of 2007 over its first half.
Provinces posting increases above the national 5.8 per cent level included Alberta, where ag land values were up 6.7 per cent in the first half of 2008, and Manitoba, with an average 6.2 per cent increase.
Saskatchewan, Quebec and Nova Scotia saw increases just below the national average increase, at 5.6, 5.5 and 5.2 per cent respectively, FCC reported.
Ontario and British Columbia also saw increases in average ag land values in the first half of 2008 (4.6 and three per cent, respectively). Meanwhile, average values in Newfoundland and Labrador remained flat and New Brunswick and Prince Edward Island posted decreases of 0.3 and 2.4 per cent respectively.
In beating the national pace for rising farmland values, Alberta saw increases tied mostly to grain and oilseed markets in its central and northern regions, increased demand for rural land tied to “significant commercial development” along the Highway 2 corridor, and speculative land buying around the province’s main urban centres, FCC said.
Manitoba, also beating the national pace, showed increases “largely due to optimism fuelled by higher commodity prices,” FCC said, citing particular interest in corn and bean land as well as land in “concentrated dairy” areas. Increases in cropland values were “tempered slightly in some crop areas because of higher input costs, especially fertilizer and fuel.”
Meanwhile, on Prince Edward Island, which posted the deepest decrease in average ag land values, FCC reported that tight margins in the potato industry and low prices in the red meat industry “resulted in a surplus of farmland for sale.” P.E.I. buyers’ decisions on what land to buy and for how much were “driven more by financial returns than by competition between buyers,” FCC said.