PERTH — The headwinds of higher interest rates and lower corn prices slowed the rise in Southwestern Ontario farmland prices last year, though they still increased by just over 10 %, according to the latest annual report by analyst Ryan Parker of Valco Consultants in London.
Farmland in the region’s 11 counties had been increasing at a torrid rate, surging more than 25 % in 2021 and again in 2022 (a more than 50 % increase in two years). The most recent 10 % increase in 2023 is “closer to the long-term term rate of increase that is typically quoted in the 5 to 10 % range,” writes Parker. He suggests a continuation of this trend if corn remains below $5 bushel and interest rates above 5 %. Corn prices dropped 35 % (below $5 per bushel) in 2023, while interest rates were two to three times higher than the 2020-2022 period, he points out.
But farmland prices still increased overall, with many areas recording new highs last year. Farms in many areas routinely traded for over $25,000 per acre — the 2023 median price was $25,571 — and exceeded $40,000 per acre “in pockets,” according to Parker.
He also noted a decline in the number of farm property bidders in the last quarter of the year and some surprising outcomes from this reduced demand. “In multiple areas where values had been $30,000 to $40,000 per acre for the year prior, there were a few farm sales that came in lower than $30,000 per acre. Although I try to avoid the rumour mill, it was notable for the first time … I can recall that the buzz in the countryside was about these lower sales and not about the new high sale.”