FCC reports strong increase in Canadian farmland values
According to Farm Credit Canada (FCC), Canadian cultivated farmland values experienced an average increase of 5.5% in the first half of 2024.
Over the 12 months from July 2023 to June 2024, farmland values rose by 9.6%, although this represents a deceleration compared to the previous year's growth during the January to December 2023 period.
“Farmland values increased at a slower rate, yet 5.5% growth in six months is still a very strong number,” stated J.P. Gervais, FCC’s chief economist.
For the second consecutive year, Saskatchewan and Quebec reported the highest average six-month increases in the country, recording growth rates of 7.4% and 5.4%, respectively.
New Brunswick, British Columbia, and Alberta also saw similar growth rates at 5.2%, 5.0%, and 4.6%, respectively.
Meanwhile, Manitoba experienced a 3.9% increase, closely followed by Nova Scotia at 3.8%. Ontario's increase was notably lower at 2.1%, while Prince Edward Island registered the smallest rise at 1.7%.
Despite high borrowing costs and reduced commodity prices, demand from buyers remains strong, partly due to the limited availability of farmland. This indicated that as borrowing costs decline, this trend could help maintain elevated farmland prices.
“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,” Gervais added.
However, Gervais pointed out that overall farm cash receipts are expected to decline by 3.3% in 2024, as commodity prices show limited signs of recovery. This decline may affect farmers' ability and willingness to assign higher valuations to farmland.
“Understanding economic and financial trends is essential for making informed decisions. FCC is committed to providing the industry with data-driven insights that can help producers and investors navigate the current economic headwinds,” said Gervais.
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