Even when it’s blanketed in snow and ice, prairie farmland continues to be a hot commodity among investors.
In its latest report of farmland values released earlier this week, Farm Credit Canada reported the average value of Canadian farmland rose by 10 percent in the last half of 2012.
The latest increase comes on the heels of two similar FCC reports — one for late 2011 and the other for early 2012 — suggesting average increases in those periods of 8.6 percent and 6.9 percent.
If those numbers are accurate, the value of a $100,000 parcel of “average” Canadian farmland rose to nearly $128,000 in the 18-month period ending Jan. 1, 2013, numbers that would make most Bay Street portfolio mangers blush with envy.
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Prairie farmland values posted solid gains in the last half of 2012, although two provinces — Saskatchewan and Alberta — saw increases below the Canadian average.
Saskatchewan and Alberta experienced increases of 9.7 percent and 7.2 percent, respectively.
Manitoba gains were calculated at 13.9 percent, second only to Quebec’s 19.4 percent increase in the six months ending Dec. 31, 2012.
Cathy Gale, FCC’s Saskatchewan valuations manager, said the continued strength in prairie farmland prices reflects a general sense of optimism in the Canadian agriculture sector.
“It’s strongly related to commodity prices and just the generally positive attitude toward agriculture right now,” she said.
A sense of optimism is evident not only among agricultural stakeholders in Canada but also in the United States, she added.
Out of 10 Canadian provinces surveyed, none registered a decrease in average farmland values during the last half of 2012.
Values in New Brunswick and Newfoundland were unchanged. Values in British Columbia were up marginally by 0.4 percent.
FCC derives its average farmland values by monitoring the values of 245 benchmark properties based on comparable parcels of farmland located nearby.
Beginning this year, FCC will report farmland values on an annual basis, rather than every six months.
Gale said moving to annual valuations will reduce costs and manpower requirements and result in valuations that are more easily understood.
