Producers may have to adjust business plans, FCC economists say
Staff Writer
Farms.com
Producers looking to expand their operations could face financial challenges as the value of Canadian farmland continues to grow.
Across the country, farmland values increased by 8.4 per cent in 2017, a recent
report from Farm Credit Canada (FCC) found. This growth followed a rise of 7.9 per cent in 2016.
While all provinces saw increases, Saskatchewan, Ontario, Quebec and Nova Scotia had the largest changes last year:
| Province | Per cent change |
| B.C. | 2.7 |
| Alta. | 7.3 |
| Sask. | 10.2 |
| Man. | 5.0 |
| Ont. | 9.4 |
| Que. | 8.2 |
| N.B. | 5.8 |
| N.S. | 9.5 |
| P.E.I. | 5.6 |
(FCC could not acquire a sufficient data to assess values in Newfoundland and Labrador.)
Farmers may alter their business decisions due to the growth in the value of these assets, J.P. Gervais, chief agricultural economist for FCC, said in a media briefing last week.
“Rising land values make it a little more difficult to expand,” he said.
New operators may also face difficulties entering the market, Gervais added.
But individuals who do not have the financial ability to purchase more land do have other options.
For example, farmers can lease land to “add onto their existing land base to make sure they reach a level of production that makes them competitive,” he said.
While higher land prices may cause some farmers to change their business plans, others may not alter their decisions.
“As we’ve seen, we do have producers that are buying and expanding as part of their long-term plans,” he said.
In fact, farmland prices have risen since 1993, FCC revealed in
another report. Over this period, producers also increased the acreage of their operations, data from Statistics Canada showed.
Source: Statistics Canada. Table 004-0002 - Census of Agriculture, total area of farms and use of farm land, Canada and provinces, every 5 years (number unless otherwise noted), CANSIM (database). Accessed: 04/25/18.
Canadian farmers had an average land base of around 820 acres in 2016, which is 212 acres larger than the value in 1996. (Producers saw an 11.3 per cent increase in land values that year.)
Overall, however, the effects of land prices are going to be felt “really on a case-by-case basis, but (they) do have an impact on where producers are going to take their business,” Gervais said.
Alex Belomlinsky / DigitalVision Vectors / Getty Images photo