Canadian farmland is still fertile for growth as values climb

Farm Credit Canada's (FCC) mid-year review showed that Canadian cultivated farmland values increased by 5.5 percent in the first half of 2024.

Over the 12 months from July 2023 to June 2024, farmland values rose by 9.6 percent, a slower growth rate compared to the previous period from January to December 2023.

FCC's chief economist, JP Gervais, stated, “Farmland values increased at a slower rate, yet 5.5 percent growth in six months is still a very strong number.”

Saskatchewan and Quebec led the country in six-month increases, with farmland values rising by 7.4 percent and 5.4 percent, respectively.

In other provinces, values also increased: New Brunswick (5.2 percent), British Columbia (5.0 percent), and Alberta (4.6 percent).

Manitoba recorded a 3.9 percent increase, followed closely by Nova Scotia at 3.8 percent. Ontario's rise was more modest at 2.1 percent, and Prince Edward Island had the smallest increase at 1.7 percent.

Despite higher borrowing costs, lower commodity prices, and rising land costs, certain buyers have continued to invest in farmland. Looking ahead, decreasing borrowing costs and limited farmland supply are expected to maintain current high prices. 

Gervais added, “The continued rise in farmland values highlights a positive and robust long-term outlook for the agriculture sector. As we move into the latter half of 2024, the trends in farm revenues and interest rates will be key indicators of where farmland values might head next.”

He also noted that farm cash receipts are expected to decline by 3.3 percent in 2024, as commodity prices show little sign of rebounding quickly, which could reduce farmers' willingness to increase farmland valuations. 

Gervais concluded by stressing the importance of understanding economic and financial trends in decision-making.

He said, “FCC is committed to providing the industry with data-driven insights that can help producers and investors navigate the current economic headwinds.”