The price of farmland in Canada jumped in value in 2021, despite pandemic supply chain disruptions and adverse weather, the 2021 Farmland Values Report from Farm Credit Canada (FCC) says. The report showed an 8.3 per cent national average increase in 2021, up from 5.4 per cent in 2020.
Ontario recorded the largest jump in price at 22.2 per cent. British Columbia followed behind at 18.1 per cent, Prince Edward Island at 15.2 per cent, Nova Scotia at 12.3 per cent and Quebec at 10 per cent.
“The low interest rate environment and favourable commodity prices seem to have offset some of the many challenges that could have been expected to restrain the demand for farmland and the price producers are willing to pay for land,” J.P. Gervais, FCC’s chief economist, says in a news release about the report.
Other provinces showed more moderate 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 had a 5.2 per cent average increase, the report says.
Once again there was insufficient number of publicly reported sales in Newfoundland and Labrador, Yukon, Northwest Territories and Nunavut.
There’s uncertainty, with labour shortages, supply chain disruptions, geopolitical tensions, farm input inflation and incremental interest rate increases expected for 2022, Gervais notes. However, FCC is forecasting grain receipts will increase in 2022, fuelled by strong demand and tight global supply.
The report notes increases in farmland values 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.
Ontario reported the sharpest overall increase, more than quadrupling its 2020 average farmland value increase of 4.7 per cent, while B.C. more than doubled its average increase form the previous year. With a much smaller farmland market, P.E.I.’s average increase was more pronounced from one year to the next.
Land markets in Prairie provinces were somewhat tempered by adverse growing conditions, while farmland values in several regions of B.C. were supported by limited supplies of available land and proximity to urban areas, the report says.
In Alberta, an increase in the demand for potatoes prompted an increased demand for land to produce potatoes as well, the report notes. However, hot and dry conditions reduced yields for some growers this year.
Relatively good growing conditions in Quebec, Nova Scotia and New Brunswick contributed to the farmland value increases in those provinces. In the western area of New Brunswick, dominated by potato crops, it experienced favourable weather conditions last year and yields were reported to be the highest in recent years.
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