Farmland values increased moderately in 2016
By Jennifer Jackson
Farmland values across Canada increased 7.9 per cent in 2016, according to the 2016 Farm Credit Canada (FCC) Farmland Values Report, released April 10.
The 2016 increase in value is seemingly modest compared to 2015’s 10.1 per cent increase and 2014’s 14.3 per cent increase.
Prince Edward Island farmland increased the most in value of all the provinces in 2016 – 13.4 per cent. New Brunswick represented the smallest farmland value increase at 1.9 per cent.
FCC reported Ontario farmland values increased by the second smallest percentage, at 4.4 per cent.
The FCC appraisers analyzed agricultural land sales and benchmarked these sale values with others in the respective regions and provinces.
Farms.com has compiled the notable values in each province.
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British Columbia
British Columbia’s farmland value increased 8.2 per cent last year, which was higher than its 2015 increase of 6.5 per cent.
The South Coast saw the largest increase of 17.7 per cent due to a large amount of farmland sales. The Peace Region – Northern B.C. region also saw a large farmland value increase of 9.1 per cent due to expanding farm operations and outside buyers attracted by the affordability of the land.
Alberta
Farmland value increased on average by 9.5 per cent in Alberta in 2016 – the second-highest provincial growth in the report. This value follows an 11.6 per cent increase in 2015 and an 8.8 per cent increase in 2014.
The strong provincial farmland value is influenced by such factors as the strength of the northern region’s expanding grain industry and buying activity in the south.
The Peace region reported the smallest increase in farmland values across the province at 7.7 per cent. This fact is largely due to weakness in the gas and oil industries, paired with poor weather during the 2016 growing season.
Just south of the Peace region, the Northern region saw the greatest farmland value increase in the province at 11.8 per cent. This region also suffered pressure from the oil and gas industries, but FCC appraisers reported most land was sold through highly competitive auctions.
Saskatchewan
Saskatchewan’s farmland value increased by 7.5 per cent last year – a value slightly smaller than the 9.4 per cent increase in 2015 and 18.7 per cent increase in 2014.
FCC appraisers reported strong sale activity and land demand across most of the province. The South Western region saw the largest increase of 16.6 per cent. The South Eastern and East Central regions, however, saw no increase in farmland values.
Manitoba
Manitoba experienced a farmland value increase of 8.1 per cent in 2016. This follows the 12.4 per cent increase in 2015 and 12.2 per cent increase in 2014.
Much like the other Prairie provinces, Manitoba suffered from poor weather that could have diminished farmers’ desires to acquire more land. However, increased potato yields and increased soybean acres drove up 2016’s values in the province.
The Central Plains – Pembina Valley region’s farmland increased by 11.0 per cent, the highest value in the province. Although some of the area saw excessive amounts of rain, the increased value was mainly influenced by the many private land sales between renters and landlords.
Ontario
Ontario’s farmland values increased by an average of 4.4 per cent last year. This growth is slightly less than 2015’s 6.6 per cent increase and 2014’s 12.4 per cent increase.
Farmland value increases across the province in 2016 were fairly stable and consistent – all regions had single digit increases.
The province’s increase in farmland values was largely due to high demand for limited amounts of farmland, growth of supply-management farms and an increase in demand for land to grow cash crops.
Southern Ontario – representing Essex, Chatham Kent, Lambton, Elgin and Middlesex counties – saw the largest increase in farmland value at 6.9 per cent. The demand for farmland in this area is high, but this demand is only apparent when farmland cost can be supported through crop production and commodity prices.
Also, many areas in Southern Ontario have soil types that are favorable to specialty and niche crops – this was another factor in farmland value increases.
South Eastern Ontario saw the smallest increase in farmland value at 1.5 per cent. This area represents Hamilton, Brant, Haldimand, Norfolk and Niagara counties.
Quebec
Quebec farmland increased by a value of 7.7 per cent in 2016 – compared to an increase of 9.6 per cent in 2015 and 15.7 per cent increase in 2014.
The increases in farmland value were a result of fairly consistent demand.
The highest increase in Quebec farmland value for 2016 was the Saguenay–Lac-Saint-Jean region at 16.2 per cent. Land prices in this region were affordable in respect to other regions, and therefore stimulated demand. Other parts of the province, in contrast, had more highly priced farmland which were connected with more modest increases in farmland values.
New Brunswick
Farmland values in New Brunswick increased by an average of 1.9 per cent last year. The province’s farmland values increased by 4.6 per cent in 2015 and 8.0 per cent in 2014.
While farmland values remained constant in the Southern and Northern regions, values increased by 4.0 per cent in the Western region.
The modest increase in land value is due to the stable potato processing industry. Producers continue to expand their operations so they can rotate their potato crops accordingly. (The ideal potato rotation includes one year in crop, followed by summer fallow for two years, according to the FCC report.)
Nova Scotia
Nova Scotia’s farmland values increased by 9.1 per cent in 2016, following a 6.3 increase in 2015 and a 7.0 per cent increase in 2014.
The province experienced regional farmland increases between 8.8 to 9.2 per cent, in all types of farm production – from dairy to orchards. This increase was largely due to a growing demand for farmland, with buyers including producers wanting to expand their operations and individuals wanting to move back to the province to farm.
Prince Edward Island
Prince Edward Island’s farmland values increased by 13.4 per cent last year – this was the greatest growth across Canada. The Island’s farmland values increased by 8.5 per cent in 2015 and 9.3 per cent in 2014.
The Kings region (the most western region) represented the largest increase in farmland value at 15.4 per cent.
The increase in farmland value across the province mainly represents the growing demand for cultivated acres and expansion to increase crop rotations and grow livestock feed.
Low prices on the Island also drove demand (and therefore farmland value increases) in all types of land for agricultural use.
Newfoundland and Labrador
Due to a lack of farmland transactions reported in 2016, FCC could not accurately depict farmland values for Newfoundland and Labrador.
More information on regional farmland values is in the FCC online report.