Farm Credit Canada’s annual charting of the ebb and flow of Canada’s farmland values saw price increases ahead of the curve in Saskatchewan, Manitoba and Quebec pushing nationwide values to their biggest year-over-year jump in recent history.
The federal farm lending agency on Monday released its 2013 Farmland Values report, which tracks variations in bareland values by following 245 benchmark properties across the country.
The study booked a 22.1 per cent rise in Canada’s farmland values during 2013, the highest year-over-year rise since FCC began reporting on land values 28 years ago, beating the previous record of 19.5 per cent during 2012. [Related story]
The highest year-over-year provincial increase was seen in Saskatchewan at 28.5 per cent, compared to 19.7 per cent during 2012 and 22.9 per cent in 2011.
“Strong grain and oilseed prices in the early part of the year, coupled with higher cattle prices in the latter half of the year, generated optimism in much of the agriculture industry” in the province, Regina-based FCC said Monday, also noting record yields and “attractive” interest rates.
The demand, FCC said, came from local producers looking to expand by buying land they had rented, from young producers moving back to Saskatchewan and from “out-of-province purchasers.” In view of record prices, FCC added, other producers “made succession plans to exit the industry.”
For similar reasons, Manitoba’s benchmark properties saw values rise 25.6 per cent year-over-year for the second year in a row, FCC said.
On top of those market drivers, the “revenue-generating potential” for farmland from oil development in the province’s southwest has put “upward pressure” on demand, while in the southeast, supply-managed farms “continued to expand their land bases to accommodate their production.”
Quebec, which has yet to log a decrease in farmland values in the 28 years of FCC’s surveys, saw benchmark values rise 24.7 per cent in 2013 over 2012, down from a 27.4 per cent rise in 2012.
Values rose provincewide — and mostly in the first half of the year — but the increases were “most pronounced in areas that had only experienced modest increases in recent years,” FCC said Monday. While hikes in previous years were seen mostly in “cash crop areas” in the province’s west, increases were noted in 2013 in areas of “more diversified production” such as the Bas-St-Laurent and Beauce regions.
Some producers from the province’s southwest have also begun buying in eastern Quebec, where “land prices were more affordable,” FCC said.
Much of Ontario’s 15.9 per cent increase in 2013, compared to a 30.1 per cent hike in 2012, also took place in the first half of the year, FCC said.
Huron, Simcoe, Middlesex and Elgin counties led the province with the “most significant” increases, with demand coming from livestock producers seeking larger land bases and from cash crop producers in view of “favourable crop yields and receipts.”
Alberta’s benchmark land values rose 12.9 per cent in 2013 — down slightly from a 13.3. per cent increase in 2012 — with much of the rise seen in the first half of the year spurred by strong ag commodity prices and economic confidence based on “increased oilfield activity,” FCC said.
Competition for land caused prices to rise along Alberta’s Highway 2 corridor, FCC said, also noting high demand in the province’s south for irrigated land. In the province’s north, larger farms “consolidated their land bases,” also boosting land values.
In New Brunswick, land values rose 7.2 per cent in 2013, compared to flat levels in 2012 and a 1.3 per cent increase in 2011. The jump in 2013 was mainly in the Grand Falls and Carleton areas, FCC said, with purchases by expansion-minded producers and higher demand for land closer to potato processing plants.
Prince Edward Island benchmark values rose 4.4 per cent in 2013, down from nine per cent in 2012, with hikes seen mainly in the western part of Prince County and the Summerside area and nearly all sales taking place between potato processing growers, FCC said.
“Some potato growers chose to buy land instead of renting it to ensure that they would be able to operate within a three-year land rotation schedule,” the ag lender noted.
British Columbia’s farmland values, meanwhile, saw an increase of just three per cent in 2013, up from 0.1 and 0.2 per cent in 2012 and 2011 respectively. Vancouver Island farmland saw little interest and limited demand, with properties staying on the market for an “extended period,” FCC said.
In the province’s north, “established farmers wanting to expand quickly purchased the limited amount of higher-quality farmland that came on the market in the Peace River region,” FCC said. In B.C.’s highly-productive Lower Mainland, meanwhile, volumes of farmland sales remained average and values rose only slightly.
Nova Scotia’s benchmark values rose just 1.9 per cent in 2013, down from 9.8 per cent in 2012. The increase came mainly from demand in the Kentville area, as poultry producers sought land to grow feed. Vineyard operators also sought south-facing land suitable for grape production.
Benchmark farmland values in Newfoundland and Labrador remained unchanged for the third year in a row, FCC reported. The provincial government continued its land consolidation program, meant to help maintain productive ag land by buying from non-farm landowners and retiring farmers and leasing to active farms. However, FCC said, “transactions were limited and none supported a change in values.”
FCC previously issued Farmland Values reports every six months, but said last April it would return to an annual review, starting with this month’s report. — AGCanada.com Network