By Tom Collins
Ontario farmland prices continued to climb last year but there were no wild price spikes, says a report from Farm Credit Canada (FCC).
The annual farmland value report said Ontario prices were up 4.4 per cent last year over 2015. While that’s a healthy price increase, it’s down from the double-digit price hikes that farmers saw each year from 2011 to 2014, including the phenomenal 30 per cent land price spike in 2012.
The average price of Ontario farmland rose 5.1 per cent last year in Eastern Ontario. FCC defines Eastern Ontario to include Stormont, Dundas and Glengarry, Prescott-Russell, Ottawa, Leeds-Grenville, Lanark, Frontenac and Renfrew. Prices were up 2.6 per cent in North Central (Hastings, Prince Edward, Northumberland, Peterborough, Kawartha Lakes, Durham and Lennox and Addington).
Statistics Canada says the average Ontario farmland price was $10,063 per acre in 2015. That’s almost double what it was in 2009 when it was $5,036 per acre and about three times the 2001 price when an acre of farmland fetched $3,028 on average.
The FCC says Eastern Ontario values rose because of local farmers buying to expand and farmers in Western Ontario, where prices are much higher, selling their land and moving to Eastern Ontario. Re/Max real estate agent Ross Peever sells mostly in Renfrew County and says he sees pressure on crop farmers to buy more land to stay in business. Owning a couple of hundred acres used to be enough, but now a cash crop farmer needs at least 700 to 1,000 acres to make it viable in the cash crop business, he said.
“Unfortunately, it’s the way it is,” he said. “With the price of machinery and everything, it just doesn’t pay for itself. The price of corn and the price of soybeans in Renfrew County is the same as it is in Kemptville or Southern Ontario. If you can buy a lot cheaper here or the neighbours can expand if they’re big guys, that’s what they’re doing.”
Peever says good systematically-tiled drained Renfrew farmland is selling for about $5,000 an acre, while randomly tiled-drained land sells for $4,000 to $4,500 and land without drainage sells for about $3,500 to $4,000. But prices are rising. He’s heard of 200 acres near Beachburg that sold for $7,000 per acre this year. That is going to convince other farmers to sell their land for higher prices as well, he said.
Marcel Smellink, of Smellink Realty in Iroquois, said last year’s drought impacted the number of sales, if not the prices. He said from June to October, he had no phone calls from farmers wanting to buy as they were worried about yields. It wasn’t until the first soybeans started to come off that farmers saw the crops had weathered the drought better than anticipated and farmers started looking to buy land again.
Smellink said some property sells quickly as neighbours snatch it up for expansion, but he knows of a farm in Brinston, south of Winchester, that has been on the market for two years. It depends on location and whether the property is one big lot or in pieces, he said.
He said Renfrew County land is in higher demand because the prices are lower. The Lancaster area, east of Cornwall along the St. Lawrence River, has seen some of the highest prices, with sales of $17,000 to $18,000 an acre for top land, Smellink said.
Farmers aren’t buying as crazily as they did a few years ago, said Allan Earle of Culligan Real Estate at Brockville.
“In some areas, some of the shine has gone off the market,” he said. “The sense of urgency is not there. The buyers know more properties will come available and if they’re patient, they’ll be able to get what they want for what they want to pay.”
Earle estimates a fair bit of farmland will change hands in the next 10 to 15 years as baby boomer farmers leave the industry.
“The farm families that have positioned themselves to continue to grow and to bring in the next generation will be the buyers. The ones that haven’t are going to be the sellers.”