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Spring 2013 Farmland Values Report
Welcome to Farm Credit Canada’s Spring 2013 Farmland Values Report.
This report covers the period from July 1 to December 31, 2012.
To view the FCC Farmland Values Report video, visit www.fcc.ca/farmlandvaluesvideo.
Introduction
Methodology
National trend
Alberta
British Columbia
Manitoba
New Brunswick
Newfoundland and Labrador
Nova Scotia
Ontario
Prince Edward Island
Quebec
Saskatchewan
Contact information
To view previous reports: Publications.
For more information: 1-888-332-3301 or farmland-values@fcc-fac.ca
*This report was published on April 15, 2013.
Introduction
As Canada’s leading agriculture lender, FCC is advancing the business of agriculture. With a healthy portfolio of more than $25 billion and 20 consecutive years of portfolio growth, FCC is strong and stable – committed to serving the industry through all cycles. FCC provides financing, insurance, software, learning programs and other business services to producers, agribusinesses and agri-food operations. FCC employees are passionate about agriculture and committed to the success of customers and the industry. For more information, visit www.fcc.ca. Follow FCC on Twitter @FCCagriculture.
FCC understands the value of having access to solid market-value information when making management decisions. That’s why FCC compiles and releases the Farmland Values Report. It tracks and highlights average changes in farmland values provincially and nationally and provides one source of information to help producers make wise business decisions.
Farmland values can differ significantly by geographical location and this must be taken into account. This report doesn’t reflect all sales information across Canada and it isn’t intended to constitute an appraisal or opinion of the value of a specific parcel. Individuals using this report are advised to obtain a comprehensive appraisal of a particular parcel to determine its appraised value.
Price is only one factor that must be considered when purchasing land. Other factors include the location, the timing of an expansion, and the individual’s financial situation and personal goals. Producers should do additional homework, such as ensuring that budgets have room to flex if land prices or trends shift. Market conditions and trends can change rapidly, which may affect the value ranges in this report.
This report describes changes from July 1 to December 31, 2012. In the future, FCC will move to annual reporting. The next report is set for the spring of 2014.
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Methodology
In 1985, FCC established a system with 245 benchmark farm properties to monitor variations in bareland values across Canada.
Since 1990, the benchmark properties have been appraised semi-annually in January and July. These selected parcels represent the most prevalent classes of agriculture soil in each part of the country. Changes in value are weighted based on cultivated farmland per area.
FCC appraisers estimate market value using recent comparable sales. These sales must be arm’s-length transactions. once sales are selected, they’re reviewed, analyzed and adjusted to the benchmark properties.
Land prices vary significantly between regions and provinces. That’s why FCC measures provincial land value trends on a percentage basis. Reporting on the percentage change in value versus the average price per acre provides a more consistent national approach.
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National trend
The average value of Canadian farmland increased 10.0% during the second half of 2012, following average increases of 8.6% and 6.9% in the previous two six-month reporting periods.
Farmland values remained stable or increased in all provinces. Quebec experienced the highest average increase at 19.4%, followed by Manitoba at 13.9% and ontario at 11.9%.
Saskatchewan and Alberta experienced 9.7% and 7.2% average increases respectively, followed by Nova Scotia at 6.8%, Prince Edward Island at 5.7% and British Columbia at 0.4%.
Average farmland values were unchanged in New Brunswick and Newfoundland and Labrador.
Canadian farmland values have continued to rise over the last decade. The current average national increase of 10.0% is the highest since FCC began reporting on farmland values in 1985. The second highest increase occurred in the first half of 2012, at 8.6%. The last time the average value decreased was by 0.6% in 2000.
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Alberta
Farmland values in Alberta increased an average of 7.2% during the second half of 2012, following gains of 5.7% and 4.5% in the previous two reporting periods. Values have continued to rise in the province since 1993.
Competition for land purchases caused prices to increase, with location and availability as the main price drivers. Higher commodity prices and strong demand along the Highway 2 corridor resulted in a higher demand for agricultural land in that area.
The irrigation area of southern Alberta continued to see high demand for irrigated land, mainly as a result of strong commodity prices and for specialty crops grown under contract.
Demand from producers looking to expand their land base to gain efficiencies also drove increases in farmland values throughout the province.
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British Columbia
Farmland values in British Columbia increased an average of 0.4% during the second half of 2012, following a decrease of 0.3% during the first half of the year. Values increased by 0.2% during the second half of 2011.
Vancouver Island had a limited number of farm property sales, reflecting the overall real estate market in the region.
In the rural lower mainland, including the Fraser Valley, sale volumes and prices were stable. Demand for farmland in the last part of 2012 came from field crop and dairy farmers. While demand for rural acreage properties is relatively steady, agriculture producers comprise the bulk of the farmland market.
The South Okanagan continued to see a significant number of listings with stable to softening prices. Being in a premium location and having agricultural potential made individual properties more marketable.
The Kootenay region in the southeast saw a slow market with significant listing volumes in some areas. Lower demand from out-of-province buyers also limited sales.
In the Cariboo region, the farmland market remained relatively stable. Increased demand from out-of-province buyers resulted in the sale of a number of larger ranches that had lengthy listing periods.
The Northwest region, including the Bulkley Valley, experienced low demand and stable prices.
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Manitoba
Farmland values in Manitoba increased an average of 13.9% in the second half of 2012, the second highest provincial increase in the country. The previous two reporting periods saw increases of 10.3% and 1.9% respectively. Farmland values in Manitoba have risen consistently since 2001 and this is the highest increase seen since FCC began reporting results in 1985.
Despite drought conditions in most areas, farmland values generally increased throughout the province. Strong commodity and stronger cattle prices, along with low interest rates, helped spur this growth. The continued consolidation of the industry and interest from out-of-province buyers also drove up values.
Competition between the supply-managed industry, grain sector and lifestyle farmers caused prices to increase in the province’s southeast region. In the Interlake region, stronger beef prices affected demand. In the south, south central and southwest areas, the grain and oilseed sectors led the rise in farmland values. These sectors also increased farmland values in the northwest region, with lower-valued land experiencing the largest increase in value.
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New Brunswick
Average farmland values in New Brunswick were unchanged in 2012, following an average increase of 1.3% in the second half of the previous year.
Farmland values have increased slowly or remained stable in New Brunswick since reaching a peak increase of 6.3% in the last half of 2008. This stability is largely due to the limited amount of market activity. Land for sale is scarce in potato-producing regions and farmland sold quickly, causing farmland values to rise.
Market activity was more limited in other parts of the province due to low demand. Although crop input prices remained relatively stable during the reporting period, many producers still considered them high, thereby narrowing margins and limiting the cash available to purchase land.
Past consolidation in the agriculture sector has also diminished the number of potential buyers for farmland, which has limited the somewhat recent increases in farmland values.
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Newfoundland and Labrador
Farmland values in Newfoundland and Labrador remained unchanged during the second half of 2012. Values showed no change in the previous two reporting periods and have remained stable or increased in the past decade.
The provincial Department of Natural Resources has continued its Land Consolidation Program, designed to acquire and lease back parcels to active farming operations to help maintain productive agricultural land. Since these sales aren’t available to the public and farmland sales between individuals are uncommon, there were no sales available that would allow proper monitoring of farmland values during the reporting period.
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Nova Scotia
Nova Scotia’s farmland values increased an average of 6.8% in the second half of 2012. In the previous two reporting periods, values increased by 2.8% and 3.2% respectively. Since 2001, farmland values in Nova Scotia have remained stable or increased.
The western regions of Nova Scotia led the province with a significant number of sales. Agricultural parcels offered for sale on the open market generally sold quickly. Other regions of the province also saw an increase, although at a slower rate than in the west.
Higher feed costs led to increased competition among livestock producers, particularly in the poultry industry, for land to grow their own feed.
The Colchester/East Hants area saw ongoing demand from lifestyle farmers and Halifax commuters. The Halifax Shipyard project announcement spurred demand and many landowners kept their properties in hope that prices will continue to rise. The increasing interest of dairy, equine and lifestyle farmers in the land market also led to higher farmland values.
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Ontario
Farmland values in ontario increased an average of 11.9% in the second half of 2012, following gains of 16.3% and 7.2% in the previous two reporting periods. Farmland values in ontario have risen for the past 20 years.
Some cash crop producers leveraged their current land holdings to purchase less expensive land in other locations, such as in Northern ontario, yet the resulting impact on farmland values was relatively modest. The southwestern, central and southern regions saw significant increases in the second half of 2012. Most areas experienced a high number of private transactions as well as those occurring through the tendering process or property auctions.
In most areas, the demand for farmland outweighed available supply, driving prices higher. Demand was strong from the dairy industry and large intensive livestock enterprises that need land to meet nutrient management and cropping requirements. Cash crop operators also wanted to grow their land base due to higher commodity prices and good crop yields.
With the current strong demand and prices for land, some producers planning to exit the industry chose to liquidate their land holdings instead of collecting rental income.
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Prince Edward Island
Prince Edward Island farmland values increased an average of 5.7% in the second half of 2012. The two previous reporting periods saw increases of 3.1% and 1.5% respectively.
Farmland values have remained stable or increased in Prince Edward Island during every reporting period since the last half of 2009.
The province saw an increased number of land sales, which resulted in increased farmland values. Bareland prices were markedly higher than in the past few years.
While some areas of the eastern and central regions experienced drought conditions, the western region had adequate moisture and sunshine throughout the crop season. This led to a third year of strong potato yields, providing the funds for some potato growers to purchase more land. In general, higher farmland prices reflected the overall confidence in the potato industry.
Some whole farm transfers occurred in the potato and dairy industries. Interest from large organic farms and soybean growers also helped to increase farmland values in the province.
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Quebec
Quebec farmland values increased an average of 19.4% in the second half of 2012, the highest increase in the country. This followed increases of 6.7% and 4.3% in the previous two reporting periods. Farmland values in Quebec have remained stable or increased since FCC began reporting them in 1985. Quebec is the only province that has never experienced a decrease in its average farmland values.
The major farmland buyers were Quebec producers who expanded their operations. While demand for farmland was high throughout the province, it was strongest in the Montérégie, Centre-du-Québec and Lanaudière regions, and in part of the Laurentides.
Some of this growth may be attributed to historically-low interest rates, corn prices being substantially higher than their ten-year average and the continual increase in farm productivity and crop yields. Agricultural producers who have liquidity see farmland as an attractive investment compared to alternative options.
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Saskatchewan
In the second half of 2012, farmland values in Saskatchewan increased an average of 9.7%, following a similar increase of 9.1% in the first half of the year. This followed a gain of 10.1% in the previous reporting period, continuing a trend of price increases that began in 2002.
Most increases occurred in areas that had previously experienced flooding and had, as a result, seen few changes in the past two years. While the strong demand for high-quality, clay-based land continued, prices for this type of land tended to remain stable over the reporting period. The price of lower-valued land experienced a greater increase during the current reporting period.
Interest from out-of-province buyers continued. Some retiring farmers sold large blocks of land to take advantage of the strong prices to sell their entire operation.
Throughout Saskatchewan, many of the land sales weren’t advertised. Landowners who rented out their property continued the trend of selling privately to their tenants.
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Contact information
For more information about farmland value trends in your area, contact:
Alberta
Bruce Gordon, Senior Appraiser (English)
bruce.gordon@fcc.ca
403-221-3401
Éva Larouche, Senior Strategist Media Relations and Social Media (bilingual)
eva.larouche@fcc.ca
1-888-780-6647
Atlantic Canada
Charles Dubé, Senior Appraiser (bilingual)
charles.dube@fcc.ca
506-851-7141
British Columbia
Bill Wiebe, Senior Appraiser (English)
bill.wiebe@fcc.ca
604-870-2719
Éva Larouche, Senior Strategist Media Relations and Social Media (bilingual)
eva.larouche@fcc.ca
1-888-780-6647
Manitoba
Claude Jacques, Appraiser (bilingual)
claude.jacques@fcc.ca
204-239-8472
Ontario
Dale Litt, Senior Appraiser (English)
dale.litt@fcc.ca
519-291-2192
Jean Lacroix, Valuation Manager (bilingual)
jean.lacroix@fcc.ca
613-271-7193
Quebec
Hugues Laverdure, Valuation Manager (bilingual)
hugues.laverdure@fcc.ca
450-771-6771
Saskatchewan
Cathy Gale, Valuation Manager (English)
cathy.gale@fcc.ca
306-780-8336
Éva Larouche, Senior Strategist Media Relations and Social Media (bilingual)
eva.larouche@fcc.ca
1-888-780-6647
Valuation division
Richard Hayes, Senior Director Valuation (bilingual)
richard.hayes@fcc.ca
613-271-7648
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