According to Farm Credit Canada’s Farmland Values Report, Canadian farmland increased in value by 5.4 per cent in 2020 and 8.3 per cent in 2021, an entire year under pandemic conditions and during an extreme drought for Western Canada.
The largest increases were in Ontario (22.2 per cent) and British Columbia (18.1 per cent), followed by Prince Edward Island (15.2 per cent), Nova Scotia (12.3 per cent) and Quebec (10 per cent).
Other provinces showed more moderate average increases, ranging from Alberta at 3.6 per cent to Manitoba at 9.9 per cent. Saskatchewan recorded an average increase of 7.4 per cent, while New Brunswick showed a 5.2 per cent average increase.
Farmland value is driven by several factors, says J.P. Gervais, FCC’s chief economist. For some regions, such as Ontario, small-scale farming demand and land within commuting distance to larger cities pushed up land prices. For Nova Scotia, the data suggests farmers are moving from higher cost areas to the province to farm.
Gervais says that the full farmland value impact of the drought of 2021 on the Prairies and B.C., extreme flooding in B.C. late in 2o21, and the ongoing potato market disruption in PEI will not be fully realized until the years ahead.
The year ahead promises to be full of volatility as ongoing global uncertainty, disrupted supply chains, and increasing interest rates all weigh on farm production, balanced by strong commodity prices.
Gervais reminds producers to have and maintain a risk management plan that takes into account possible economic changes, ensuring their budgets have room to flex if commodity prices, yields or interest rates shift. They also need to exercise caution, especially in regions where the growth rate of farmland values exceeded that of farm income in recent years.
Increases in farmland values reported across the country are as wide and varied as the factors that may have influenced them. Average farmland values have increased every year since 1993, however, increases were more pronounced from 2011 to 2015 in many different regions. Since then, Canada has seen more moderate single-digit increases in average farmland values.