Farmland prices continue to rise and producers are being affected.
“Anecdotally, we know that as urban land goes up in price, it makes rural land and agricultural land more economically attractive to people who want to build homes and rural residences or estates. So, I’m confident there’s a direct correlation between the escalating cost of urban land and the escalating cost of rural land in Metro Vancouver, at least,” said Kent Mullinix, director of the Institute for Sustainable Food Systems at Kwantlen Polytechnic University.
Mullinix was also one of the authors of the Vancity Credit Union report Home on the Range: Cost Pressures and the Price of Farmland in Metro Vancouver that was released in April 2016.
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According to the report, land prices in Metro Vancouver have a range of $50,000 to $80,000 an acre for a parcel size of 40 to 60 acres. That jumps up to $150,000 to $350,000 an acre for a parcel size of five acres.
Mullinix believes there’s a domino effect when the price of urban land increases in the area.
“As land prices go up here, then established farmers, sometimes if they want to expand, have to go elsewhere to do so and they are. So, dairies are moving into the Interior and it raises the price of land there so there is a domino effect. The price structures of urban land impacts agriculture land in Metro Vancouver and that impacts the price of agriculture land out into the province,” he said.
J. P. Gervais, the chief agricultural economist with Farm Credit Canada, said farmland prices have several impacts on farmers.
“So, land prices are going up, which means that producers have a balance sheet that perhaps is improving if you look at the debt-to-asset ratio and the financial leverage. If land prices go up, then the rental rates are going to go up likely as well. Landlords want to get a return on the value of their assets,” said Gervais.
“That’s the point where how it impacts farming in my mind, what’s the impact on the balance sheet of producers and, maybe, on the ability to farm the land because farmers who rent the land will be faced with a higher rental rate.”
According to the 2016 Farmland Values Report published by FCC, farmland values increased by 7.9 percent between the beginning of 2016 and the end of the year. The FCC measures the land value based on a percentage because land prices vary between provinces and within different regions of a province.
In British Columbia, farmland values rose 8.2 percent. The south coast region of B.C., which includes the once predominantly agricultural Fraser Valley, saw a 17.7 percent increase. According to the report, “an overall above-average number of farmland sales in the first half of the year (resulting in) the highest farmland value in-crease in Canada.”
