Farm Credit Canada (FCC) has released an analysis of the rent-to-price ratio for cultivated farmland in Canada. The rent-to-price ratio is obtained by crossing cash rental rates and the Farmland Values Report data. A ratio trending lower suggests that cash rental rates are appreciating at a slower pace than land values. Conversely, an increase in the ratio indicates that rental rates are increasing faster than land values. This information can help producers make decisions around buying versus renting land.
The national rent-to-price ratio in 2022 was 2.55 per cent, compared to 2.5 per cent in 2021. In Saskatchewan and Alberta, there were slight year-over-year increases. The RP ratio increased to 3.1 per cent and 2.6 per cent respectively, while all other provinces saw decreases.
“There are several economic conditions that impact the cost of renting land in Canada. Land values, the availability of land and its quality can all drive the price to rent,” explains J.P. Gervais, FCC’s chief economist.
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