The average value of farmland in Ontario increased by 2.4 per cent during the second half of 2010, following gains of 4.3 and 3.3 per cent in the two previous reporting periods, according to the new Farm Credit Canada (FCC) Farmland Values Report.
The report provides information about changes in land values across Canada and is available at www.farmlandvalues.ca.
“FCC is committed to advancing the business of agriculture and one of the ways to do this is by providing producers with our market based observations twice a year to help them make timely management decisions,” said Michael Hoffort, FCC senior vice-president of portfolio and credit risk.
In Ontario, values increased by an average of 0.6 per cent per month in 2010, the highest across Canada. Farmland values in Ontario have been rising since 1993.
Comparatively, the average value of Canadian farmland increased 2.1 per cent during the last six months of 2010 and continued the steady increase reported during the last decade. Farmland values remained stable or increased in all provinces.
Prince Edward Island experienced the highest average increase at 3.2 per cent.
In the last three semi-annual reporting periods, farmland values in Canada increased by an average of 3.6 per cent in spring 2010, 3.0 per cent in fall 2010 and 2.1 per cent in spring 2011. The highest average national increase was in 2008 at 7.7 per cent. The last time the average value decreased was in 2000 at minus 0.6 per cent.
“Canadian land values are strong and, looking at world markets in our current financing environment, there are factors in place that could exert further upward pressure on the price of farmland” said Jean-Philippe Gervais, FCC senior agriculture economist. “Rising incomes and population growth in emerging countries is increasing the demand for agricultural commodities at a time when global cereal stocks are low, production conditions in some major grain producing countries could potentially be challenging, and the availability of quality farmland worldwide is limited,” said Gervais.
According to a fall FCC survey, 26 per cent of the producers who responded planned to increase capital spending on land in 2011. Crop (33%), poultry (32%) and dairy (28%) producers were more likely to state that they are planning to increase spending on land in the next year compared to other animal (21%), hog (17%) and horticulture (17%) producers.
Manitoba (30%), Saskatchewan (30%), and Ontario (28%) producers are more likely to report that they are planning to increase spending on land compared to British Columbia (17%) and Quebec (21%) producers.
The FCC vision panel survey can be found at www.fccvision.ca/research.
The Farmland Values Report has been published since 1984. To view previous reports, visit Farm Credit Canada – Publications.
As Canada’s leading agriculture lender, FCC is advancing the business of agriculture. With a healthy portfolio of more than $20-billion and 17 consecutive years of portfolio growth, FCC is strong and stable – committed to serving the industry through all cycles. FCC provides financing, insurance, software, learning programs and other business services to producers, agribusinesses and agri-food operations. For more information, visit www.fcc.ca.
