In 2023, the price of farmland in Canada kept going up, says a report from Farm Credit Canada (FCC). The average increase was 11.5%, a little less than the 12.8% of the year before. Even with tough economic times, the demand for farmland stayed strong, making prices go up.
J.P. Gervais, the chief economist at FCC, noted, "Farmland prices have continued to increase at a rapid pace over the last couple of years, even when economic conditions suggested the growth should slow. " This growth is driven by a strong demand for farmland amidst a limited supply.
When asked by Small Farm Canada, Gervais highlighted a big problem: Farmland getting more expensive makes it tough for young and new farmers to get started. This risk comes from having to pay more to rent land and buy what they need to farm.
The provinces of Saskatchewan, Quebec, Manitoba, and Ontario experienced the highest average increases in farmland values, with rises of 15.7%, 13.3%, 11.1%, and 10.7% respectively.
These double-digit increases contrast with the more modest growth in Nova Scotia (7.8%), Prince Edward Island (7.4%), Alberta (6.5%), and New Brunswick (5.6%).
In contrast, British Columbia saw an average decline of 3.1%, despite having the highest average farmland values in the country. Some regions, including Newfoundland and Labrador, the Northwest Territories, Nunavut, and Yukon, did not have enough public sales data to fully assess farmland value trends.
Gervais explains buying farmland now needs careful thinking about how much it costs and when to buy it. With fewer farmland sales in 2023, it shows farmers are being careful with their money.
This careful spending is likely to continue into 2024 because making money from farming might be harder, and the cost of loans and farming supplies could go up.
Despite these challenges, the rising prices of farmland are a good sign. They show there's a strong demand for the food and products Canadian farms make.
Gervais says, "Producers have a long track record of making strategic investments in land. These long-term investments in food production have spurred growth and create a bright future for Canada’s agriculture and food industry."
As grain, oilseed, and pulse receipts in Canada saw a slight increase of 0.4% in 2023, with a projected decrease of 7.4% in 2024, Gervais emphasizes the importance of creating and updating risk management plans in response to economic shifts.
This strategy, along with staying informed about external factors such as commodity prices and interest rates, can help producers maintain flexibility in their budgets.
The FCC report on farmland values in 2023 offers a comprehensive overview of the current state of Canadian agriculture, highlighting the challenges and opportunities facing farmers today.