Farmland value is on the rise

By Student on May 15, 2014.

Shelby Craig


A Farm Credit Canada (FCC) report recently released shows there has been a rise in the value of Alberta farmland.

Values continued to rise nationally in 2013, and the average in Alberta increased 12.9 per cent since then and is part of a continued trend which began in 2011. Supporting the increase is the growing food demand and low interest rates.

Across Canada, average values of farmland have increased by 22.1 per cent in 2013, in which the majority began in the first half of the year.

This annual change represents the largest increase since FCC began reporting in 1985, according to the FCC report.

Kenneth Gurney, senior appraiser at FCC Lethbridge, said this kind of rise doesn’t just affect small operations.

“Increases in land prices impacts all types of operations, both large and small. Those operations that are not able to purchase land at the higher values still have the ability to rent land.”

However, Gurney added the rise could be beneficial to some smaller operations as well.

“Some land owners may want to hold onto the land and not actually farm the land. This often happens when farmers retire but are not wanting to sell the land yet. This creates opportunities for other farmers to rent the land. Renting land can be a good fit for some operations.”

Rental rates usually take a little time to adjust downward following lower grain and oilseed prices, according to the report, and multi-year leases are gaining in popularity.

J.P. Gervais, FCC chief agricultural economist, said although rentals are gaining in popularity, they can expect to change over time.

“For the next several years, we expect the demand for farmland to slow down.”