Spring 2011 Farmland Values Report (Farm Credit Canada)
Welcome to Farm Credit Canada’s Spring 2011 Farmland Values Report.
This report covers the period from July 1 to December 31, 2010.
Saskatchewan
Saskatchewan farmland values increased an average of 2.7 per cent during the second half of 2010, following gains of 2.9 and 3.4 per cent in the two previous reporting periods. Values increased by an average of 0.5 per cent per month during 2010. Farmland values in Saskatchewan have been rising since 2002.
This increase was driven by higher land prices in a couple of rural municipalities in the southern half of the province that experienced considerable sales activity. The balance of the province remained relatively stable during the reporting period.
Strong demand was evident for good quality land, especially in lentil producing areas. The favourable rate of return that many land owners are now receiving from cash rent resulted in land being pulled off the market. While there were fewer sellers in the market overall, active bidding occurred on any land that was listed for sale.
Continued low interest rates, increasing commodity prices and rebounding cattle prices also contributed to strong land demand. Saskatchewan also saw purchasers from other countries relocating to farm in the province.
While seeding and harvest in a large portion of the province was challenging due to excessive moisture, the crop that was harvested was variable in terms of quality and quantity.
Factors that contributed to minimal land sales in some areas of the province included unseeded acres due to spring flooding.
National Trend
The average value of Canadian farmland increased 2.1 per cent during the last six months of 2010, following increases of 3.0 and 3.6 per cent in the previous two reporting periods. When combined, the increase in the average value of farmland across Canada rose by 5.1 per cent in 2010.
Farmland values remained stable or increased in all provinces. Prince Edward Island experienced the highest average increase at 3.2 per cent, followed by Saskatchewan at 2.7 per cent.
New Brunswick and Ontario each saw 2.4 per cent growth, followed by Alberta at 1.5 per cent and Manitoba at 1.3 per cent.
Quebec (0.9 per cent), Nova Scotia (0.6 per cent) and British Columbia (0.4 per cent) rounded out the list of provinces that experienced a rise in farmland values.
Values were unchanged in Newfoundland and Labrador.
Canadian farmland values have risen steadily during the last decade. The highest average national increase was in 2008 at 7.7 per cent. The last time the average value decreased was in 2000 at -0.6 per cent.
Cash crop producers lead buyer activity. Strong demand with limited supply made farmland a hot commodity due to its historic performance as a stable investment and its current income generating potential.
Low interest rates also encouraged buyers to seize opportunities and influenced farmland values upward. Although it seems that more people are interested in purchasing farmland, the supply is limited. This continues to fuel competition in the farmland market.
