Farmers Forum staff
BOURGET — During the lockdowns and pandemic restrictions of 2021, Ontario farm operations grew in net worth by a whopping 19.2 % — almost double the still-impressive national increase of 10 % — much of it driven by rising farmland prices.
In Ontario, farms hit a total net worth of just over $177 billion in 2021 — with just over $209 billion in assets and $32 billion in liabilities. Province wide, that works out to $2.73 million in equity on average for each of Ontario’s 48,346 farms.
Farmland accounted for just over $170 billion of the asset value of Ontario farms in 2021. Quota in the supply-managed commodities was the second-most valuable Ontario farm asset at $16.5 billion, ahead of farm equipment at $10.8 billion, current (short-term) assets at $8.4 billion, breeding livestock at $1.7 billion and other long-term assets at $1.69 billion.
When told of the rising net worth of Ontario farms, Bourget-area beef farmer Harding Nelson said it reminded him of the soaring value of used farm machinery. Harding recounted how he bought a used 2011-model front-end loader tractor. Three years later, during the pandemic, a dealer told him he could sell it for more than the $42,000 he originally paid.
It struck him as reflective of the inflation connected with all aspects of farming, including input costs. “I talked to a farmer who took a $90,000 line of credit to buy fertilizer, then he told me he was only able to buy half the fertilizer he expected,” Harding said.
He said high land prices stymied his own recent attempt at buying another farm in his region. Harding, who hopes to expand, said he was approved for a loan that fell a little short of the $1.5 million demanded by the seller.
The reality of higher farm asset values and higher costs “is going to make it even more difficult for new farmers to enter the farm economy,” he observed.
The increase in farm equity as farmland goes up in value “is not a surprise,” South Glengarry cash-cropper Martin Lang said. “We’ve all seen where the price of land has been going.
“I guess it depends on where you’re at in the life cycle. If you’re getting ready to sell, it’s a great thing maybe. But if you’re trying to start out or grow or expand, it’s pretty tough.”
The 2021 Farm Credit Canada Farmland Values Report attributes increased land values to that year’s historically low interest rates, high commodity prices and a tight supply of farmland available for sale.
For the first time since 1981, all components of farm real estate (farmland, homes and service buildings) posted an increase of at least 10 % in Canada. Over 80 % of the growth in Canadian farm real estate value was from farmland.