Farmland values reflect strong economic outlook

Apr 23, 2018

Another increase is no cause for concern, FCC economist says

By Kaitlynn Anderson
Staff Writer
Farms.com

Canadian producers are continuing to see a rise in the value of an important asset.

Farmland values rose, on average, by 8.4 per cent last year, according to the 2017 Farmland Values Report that Farm Credit Canada (FCC) released today. This gain follows an increase of 7.9 per cent in 2016.

While many people may worry about these climbing values, the increases are actually a sign of strong and stable economic growth, said J.P Gervais, chief agricultural economist for FCC.

“When we look back at 2017, I want to point out that we had a strong year from a revenue standpoint,” he said in a media briefing last week.

Farm Credit Canada photo

Despite the weather challenges that many provinces faced, national crop receipts reached a record high last year.

“We will have the final numbers soon, but I expect (the numbers) to be up 1.5 per cent in 2017 over 2016,” Gervais said.

Even though the results are a positive indicator for the economy at large, farmers should still keep a watchful eye on the market and their operations.

“I do believe that farm operators need to be cautious in the regions where the growth rate of farmland values exceed that of farm income,” Gervais said during the briefing.

To reduce the impacts of any issues that may arise, farmers – regardless of their location or operation type – can implement risk management plans, he said.

“You have to review them on a regular basis and protect yourself against any unforeseen circumstances or events.”

This information could also encourage producers to evaluate their business plans

"With the steady climb of farmland values, now is a good time for producers to review and adjust their business plans to reflect variable commodity prices and slightly higher interest rates, assess their overall financial positions and focus on increasing productivity,” Gervais said in a release earlier today.

For more information on the report, click here.

ARTQU / iStock / Getty Images Plus photo

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