Largest semi-annual increase on record | Rising prices entice landowners to list their properties
Farmers and investors who own Canadian farmland continued to see a solid return on their investments during the first half of 2012, according to Farm Credit Canada’s semi-annual report.
In its most recent farmland valuations report published Oct. 9, FCC said the average value of a quarter section of farmland in Canada rose 8.6 percent during the first half of the year.
The largest provincial increase was recorded in Ontario, where average values rose 16.3 percent between Jan. 1 and July 1.
Farmland in Manitoba and Saskatchewan registered the second and third largest gains, with average values rising by 10.3 percent and 9.1 percent, respectively, during the first half of the year.
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Prices in Alberta rose 5.7 percent.
Cathy Gale, an FCC farmland valuations officer, said a number of factors are influencing farmland values on the Prairies.
They include strong commodity prices, low interest rates and growing demand among farmers who are eager to expand their holdings.
Oil and gas activity is also affecting land values in some parts of the Prairies.
Gale said an increasing number of renters are approaching their landlords and attempting to buy land before it is offered to other potential buyers.
Institutional investors seeking a safe place to invest money are also affecting prices.
Unlike other investments, the value of Canadian farmland has risen steadily in recent years.
The valuation increase announced last week is the largest semi-annual increase that FCC has recorded since it began reporting on Canadian farmland values in the mid-1980s.
Average farmland values in Canada have risen nearly 23 percent in the 18 month period ending June 30.
By comparison, the TSX Composite Index fell by more than 12 percent during the same period.
Gale said landowners who have owned properties for several years are watching land markets closely. Rising prices are enticing many landowners to list their properties.
For example, prices in Saskatchewan have risen nearly 20 percent over the past year.
“Land values tend to follow what’s happening in agriculture more than anything,” Gale said.
“Right now, it’s just a positive time in agriculture.”
FCC monitors the value of 245 baseline properties across Canada to determine farmland values.
Each of those properties consists of 160 acres of bare, productive farmland.
The value of each baseline property is determined by monitoring actual sales of comparable properties in the same region.
