By Tom Collins
Western Ontario farmland prices jumped anywhere from 2.8 per cent to 15.6 per cent in 2017, according to Farm Credit Canada’s annual farmland values report.
The report broke Western Ontario into five regions.
In the South Eastern region (Norfolk, Haldimand and Niagara), values rose 15.6 per cent to $9,929 an acre, with a range of $6,100 to $17,900.
In the Southern region (Essex, Kent, Lambton, Middlesex and Elgin), prices rose 4.2 per cent to $12,138 an ace, with a range of $7,000 to $18,400.
In the South Central region (Waterloo, Wellington, Brant, Wentworth, Halton, Peel and York) prices rose 15.1 per cent to $15,571 an acre with a range of $9,600 to $24,000.
In the South Western region (Huron, Perth and Oxford), prices rose 2.8 per cent to $16,819 an acre with a range of $10,200 to $22,700.
In the North Western region (Bruce, Grey, Dufferin and Simcoe), prices rose 11 per cent to $8,183 per acre with a range of $5,000 to $16,400.
Farm Credit Canada excluded the top 5 per cent and bottom 5 per cent of total sales in 2017 to determine the sales range.
Ontario farmland prices increased everywhere. Overall, Ontario farmland prices were up 9.4 per cent. That’s the third highest percentage price increase in Canada, trailing only Saskatchewan’s 10.2 per cent and Nova Scotia’s 9.5 per cent. Ontario was up 4.4 per cent in 2016.
“For the most part, Ontario’s farmland value increases continued to be fuelled by a strong demand from supply-managed farm operations, as well as cash crop producers competing for a limited amount of land available for sale,” said Scott Sahulka, Farm Credit Canada’s senior director of valuations.
Farmland values soared from 2011 to 2014, with double-digit percentage increases each year, including a whopping 30.1 per cent in 2012.
J.P. Gervais, FCC’s chief agricultural economist, does not believe 2017’s large increase is the start of a new trend. He noted that the majority of transactions were in the first six months of 2017, when interest rates were at a record low. When rates went up in the second half of the year, sales slowed down. He expected interest rates to increase at least once in 2018.
“I do think that is going to cool off the market,” he said. “To what extent is a big question mark. I do expect to have a positive number in 2018. I don’t think any increase in interest rates would be enough to completely cool off the farmland market.”
Gervais said whether a farmer believes increased land prices is a good thing depends on how much land a farmer owns.
“If you’re looking at it from the perspective of somebody that owns land and is seeing the value of the assets go up, I think that’s a good thing,” he said. “It solidifies the balance sheet, and perhaps sets the business up for success over the long term. History has proven that it’s always been good thing to work towards building equity into your farm. On the flip side, for producers that are looking to expand their land base, it makes it a little more difficult.”
He added that farmers that don’t have enough land and can’t afford to buy more need to look at leasing land.