A three-year run of stable, slow-rising farmland prices in Quebec is over as of 2008, according to an annual study by the province’s farm financing agency.
The study, released Tuesday by La Financiere agricole (FAQ) and Groupe Ageco, reported a “significant jump” of 9.7 per cent in Quebec farmland values, driven in part by a 12.8 per cent increase in the price of cultivated cropland.
The average per-hectare value for cropland alone reached $7,081 in 2008, up from $6,280 per ha in 2007, the previous peak of $6,678 in 2002 and the 1996 average value of $3,186.
For farmland generally, the average per-hectare value hit $5,710, passing the 2002 peak of $5,327, the 2007 level of $5,203 and the 1996 value of $1,620.
Transactions reported in 2008 indicate a recovery from “more modest” variations in recent years, FAQ said.
Compared to 2007 levels, FAQ noted, the Monteregie, Lanaudiere and Mauricie regions saw the largest increase in cropland values, while land values generally held relatively steady elsewhere.
Specifically, average per-hectare cropland prices in the western and eastern Monteregie regions reached $12,263 and $9,905 respectively, up from $8,431 and $9,724 in 2007, while prices in the Lanaudiere region rose to $9,155 per ha from $7,680. Land prices in the Mauricie region rose to an average of $6,686 per ha, up from $4,548 in 2007.
Certain pricey transactions did skew average land values higher, FAQ noted. For example, in the Monteregie-Ouest region, prices per hectare ranged from $8,838 to $11,780 when the top and bottom 25 per cent of transactions were removed from the calculations.
Michel Morisset, president of Quebec City-based agrifood economic consulting firm Groupe Ageco, said the rising demand for cereal crops as well as the increased demand from the biofuel sector remain significant factors in the variance in land prices.
FAQ president Jacques Brind’Amour added that the increase in farmland values was made even more significant in comparison to the performance of other assets.
Food prices and low interest rates have helped develop a favourable context for investments in agricultural real estate, he said in FAQ’s release Tuesday.