Farmland values see slight increase in 2020

FCC needs to collect more data to see if COVID-19 affected farmland values

Halfway through 2020, farmland values in Canada look to be increasing, Farm Credit Canada (FCC) reported.

On average, farmland values increased 3.7 per cent in the first part of the year. Between Jul 2019 and June 2020 values saw a 7.1 per cent increase throughout Canada, with some Prairie provinces helping this trend.

“Producers are more cautious and businesses have been more cautious. But there are still transactions in the marketplace and they seemed to be moving in roughly the same pace, maybe slightly higher (compared to the previous 12 months), especially if you look at a province like Alberta and, to some extent, Saskatchewan,” said J.P. Gervais, FCC’s chief agricultural economist.

While not all regions of Alberta and Saskatchewan saw increases, the provincial averages reflects an increase. The 2020 yearend farmland value report will present a clearer picture of regional differences, said Gervais.

The farmland values review is a helpful for producers interested in the marketplace and is part of a good management plan, said Gervais.

“If you're thinking about some challenges that you have, maybe the solution is to invest or it's a balance sheet. The income statement impacts your ability to invest and develop and grow your business. So, I think keeping an eye on the trends in the marketplace gives you a sense of, financially, what are the risks for you, and perhaps allows you to see the opportunities,” he said.

Although many people were curious to know if the pandemic affected farmland values this year, that answer remains unclear, said Gervais.

“A lot of the transactions that we used to compute the analysis were either recorded or negotiated prior to the pandemic. So, I would like to see the next six months before making a final assessment,” he told Farms.com.

SimonSkafar\E+ photo