Farmland prices in Canada rose by an average of 12.8 per cent in 2022, according to the Farm Credit Canada (FCC) Farmland Values Report. The rise was supported by strong farm income, elevated input prices and rising interest rates, however the demand for farmland is remaining robust with the supply of farmland available for sale limited.
“Challenging economic conditions could have been expected to slow the demand for farmland and the resulting price buyers paid for land in 2022,” J.P. Gervais, FCC’s chief economist, said in the release. “But the underlying fundamental factors in the farmland market tell another story.”
Nationally farmland values saw the highest increase since 2014, following gains of 8.3 per cent in 2021 and 5.4 per cent in 2020. FCC estimates that receipts of grains, oilseeds and pulses in Canada have increased 18.3 per cent in 2022, and are projected to grow 9.4 per cent in 2023, the release noted.
“Higher farm revenues are driving the demand for farmland, but higher borrowing costs and increased input prices are expected to lead to declines in the number of sales in 2023,” Gervais said.
The highest average provincial increases in farmland values were observed in Ontario, Prince Edward Island and New Brunswick, with increases of 19.4, 18.7 and 17.1 per cent, respectively. Saskatchewan followed with a 14.2 per cent increase. Five provinces had average increases below the national average at 11.6 per cent in Nova Scotia, 11.2 per cent in Manitoba, 11.0 per cent in Quebec and 10.0 per cent in Alberta, the release said. British Columbia was the only province to have recorded a single-digit increase at 8.0 per cent, but it is also a market where land values are the highest on average.
Irrigated land in Alberta had a higher overall value than cultivated land or pastureland. Irrigated land in the southern region witnessed an increase of 29.9 per cent in 2022, reaching record-high values, the release said. This considerable increase was attributed to larger contracts for specialty growers, mainly potatoes, and to land coming for sale near major growers and storage sites.
The highest increase in Manitoba farmland values, at 16.1 per cent, was in the central plains-Pembina Valley region. There were diverse buyers, including large grain producers and potato producers, the release noted. Transactions included closed-tender land sales and landlord selling to tenant.
In Quebec, the Mauricie-Portneuf region reported the most significant change in value with a 19.2 per cent increase. Land on the north shore of the St. Lawrence River was in demand from potato, cash crop, hog and dairy producers, putting upward pressure on prices. Supply of good, cultivated land in the area was low.
The highest farmland value increases in New Brunswick were observed in the western region at a 21.3 per cent increase. This growth was mainly concentrated in the northern part of the region that’s known for growing potatoes, the release said. As in past years, land suitable for potato growing was in short supply, resulting in intense bidding.
In P.E.I. farmland was limited with demand remaining high, continuing to put an upward pressure on land prices. Yields for potatoes were good despite hurricane Fiona arriving close to the harvest season. Competition among potato farmers was strong when land became available, and observed sale prices were similar to the ones recorded in western New Brunswick for the same type of land.
There was an insufficient number of publicly reported sales in Newfoundland and Labrador, Northwest Territories, Nunavut and Yukon to fully assess farmland values in those regions, the release noted.
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