PERTH — The headwinds of higher interest rates and lower corn prices slowed the rise in Southwestern Ontario farmland prices last year, though they still increased by just over 10 %, according to the latest annual report by analyst Ryan Parker of Valco Consultants in London.
Farmland in the region’s 11 counties had been increasing at a torrid rate, surging more than 25 % in 2021 and again in 2022 (a more than 50 % increase in two years). The most recent 10 % increase in 2023 is “closer to the long-term term rate of increase that is typically quoted in the 5 to 10 % range,” writes Parker. He suggests a continuation of this trend if corn remains below $5 bushel and interest rates above 5 %. Corn prices dropped 35 % (below $5 per bushel) in 2023, while interest rates were two to three times higher than the 2020-2022 period, he points out.
But farmland prices still increased overall, with many areas recording new highs last year. Farms in many areas routinely traded for over $25,000 per acre — the 2023 median price was $25,571 — and exceeded $40,000 per acre “in pockets,” according to Parker.
He also noted a decline in the number of farm property bidders in the last quarter of the year and some surprising outcomes from this reduced demand. “In multiple areas where values had been $30,000 to $40,000 per acre for the year prior, there were a few farm sales that came in lower than $30,000 per acre. Although I try to avoid the rumour mill, it was notable for the first time … I can recall that the buzz in the countryside was about these lower sales and not about the new high sale.”
In 2023, Perth and Oxford counties again led the region with the highest median per-acre farmland prices, with Perth at about $38,000 (up 6.7 %) and Oxford at about $37,000 (up 16.1 %).
In individual cases, land sold for as much as $50,000 in Perth and about $47,000 in Oxford.
Bruce County, with the highest beef production in Ontario, had the overall lowest median farmland prices, at about $18,000 per acre, though this was still up 13.4 % from a year earlier.
Hog-producing powerhouse Huron County saw the greatest year-over-year price increase, surging 23.8 % to hit a median price of $30,000 per acre.
Parker analyzes 400 to 500 property sales to create the annual report, which he’s done since 2010.
Source : Farmersforum