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FCC reports farmland values still rising


April 15, 2013
By Farm Credit Canada

April 15, 2013 — A strong agricultural economy fuelled by low interest
rates, growing world food demand and resulting higher commodity prices,
continue to underpin a national increase in average farmland values.

April 15, 2013 — A strong agricultural economy fuelled by low interest rates, growing world food demand and resulting higher commodity prices, continue to underpin a national increase in average farmland values.
 
The average value of farmland in Ontario, for example, increased by 11.9 per cent during the second half of 2012, according to a new Farm Credit Canada (FCC) Farmland Values Report.

The latest increase is part of a trend that shows farmland values have risen in the province for the past 20 years. In the two previous six-month reporting periods, farmland values increased by 16.3 per cent and 7.2 per cent in Ontario.

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The FCC report provides important information about changes in farmland values across Canada.

The average value of Canadian farmland increased by 10.0 per cent during the last six months of 2012, following gains of 8.6 per cent and 6.9 per cent in the previous two semi-annual reporting periods.

• Average farmland values remained virtually the same in British Columbia, New Brunswick and Newfoundland and Labrador.

• Average farmland values increased in the other provinces. Quebec experienced the highest average increase at 19.4 per cent.

Canadian farmland values have continued to rise over the last decade. The current average national increase of 10.0 per cent is the highest since FCC began reporting. The second highest increase of 8.6 per cent occurred in the first half of 2012. The last time the average value decreased was by 0.6 per cent in 2000.

EXISTING PRODUCERS INTERESTED IN EXPANDING

“The market is currently being driven by existing producers interested in expanding their current land base,” said Michael Hoffort, FCC Senior Vice-President of Portfolio and Credit Risk.

“With most transactions involving an incremental addition to the holdings of established operations, it is common to see aggressive bidding to secure land available for sale. Producers want to achieve economies of scale and use newer technology to farm larger areas. They also recognize limited opportunity to purchase land near their current operations.”

The national value of farmland has increased at the annual rate of 12 per cent on average since 2008, about twice the level it did from 2002 to 2007.


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