What’s driving Manitoba land prices higher? The answer might surprise you

PORTAGE LA PRAIRIE, Man. — It might be convenient to blame Bay Street investors for rising farmland values in Manitoba, but a farmland appraiser says sales data doesn’t support that theory.

“I want to make it very clear, outside investors that are coming from pension plans … they are responding to the market, they are not pushing the market,” said Gordon Daman, president of Red River Group in Niverville, Man.

“The Ontario Teachers Pension Fund … or CPP are very, very shrewd individuals. They will only go in and purchase a property once they see what that market value is.”

Daman told a Keystone Agricultural Producers meeting in Portage la Prairie Oct. 29 that local farmers are driving land prices higher in the province.

One of the key drivers is a phenomenon known as assemblage, in which producers covet land that’s close to their existing farm.

For example, a retiring farmer retires his land up for tender and 10 people place sealed bids. If the most recent sale in the area was $3,000 an acre, seven or eight bids will come in at $2,800 to $3,200 an acre.

“Then you get one (bid) that comes in and it’s at $4,000 an acre, 30 percent above what the real market is,” Daman said.


“(Usually) It’s the neighbour right next door (to the available land) that wants to get that land because they want to increase (acres).”

Once word gets out at the local coffee shop that the retiring farmer’s land sold for $4,000 an acre, it becomes the new market price.

Daman said producers are willing to pay a substantial premium for fields adjacent to their existing land base because land that is 10 or 15 kilometres from the farmyard is a logistical headache.

Producers may also have a son or daughter entering the business and they want more land that they can farm together.

Sales data and anecdotal evidence suggests that assemblage can push land prices 30 percent higher, Daman said.

Concentration is another factor in land prices, which is when a handful of farmers own most of the land in a region.

Daman said ownership concentration reduces the number of bids for available land.

As well, the dominant landowners could collaborate to keep prices under control or trade parcels of land to achieve their goals of assemblage.

Brent Vankoughnet, executive director of the Manitoba Wheat and Barley Growers Association, said swapping land for assemblage is already happening around Carman, Man.

“We definitely have (that) … where it (happens) at Chicken Chef or maybe a lounge.”

Rob Brunel, a producer from Ste. Rose du Lac, Man., said large farms may also influence prices. They can depress land values when they come onto the market because few people have $10 to $30 million to buy a 5,000 to 10,000 acre farm. As a result, the land may sell below market value.

“That’s what we see in our area. Farms are getting to the size where not anybody can (buy).”

Daman said one solution is to sell land in bits and pieces over a period of several years.

Daman said outside investors don’t play a significant role in Manitoba, but the situation is different in Saskatchewan.

For years, Saskatchewan had restrictive rules around farmland ownership, and prices were considerably lower.

“When prices in Manitoba were going for $1,500 to 2,000, we still had prices in Saskatchewan that were $700 to $800 an acre. Very, very low,” Daman said.

“When they opened up the legislation to allow for more investment, there was a vacuum and investors (filled the void).”

Contact robert.arnason@producer.com

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