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Weather Volatility, Market Uncertainty Affecting Land Prices in Canada
USAgNet - 10/14/2019

Canadian farmland values continue to rise only slightly year over year, a recent Farm Credit Canada release said. According to Farms.com, while farmland values across Canada rose by 6.6 per cent between 2017 and 2018, the national average increased by just 3 per cent in the first half of 2019, the release said. If this trend continues for the rest of the year, this modest increase in farmland values will be "part of a five-year trend of softening growth in average farmland values," the report added.

Since 1993, average farmland values have increased annually. Farmers saw steeper rises in land prices between 2011 and 2015 in some regions across the country. However, since 2015, when the average land value increase reached 10 per cent, Canadian farmland value has risen modestly by single-digit increments, the release said.

"The land-buying spark, in part caused (by) the high grain prices in 2013-2014, has now fizzled out and expectations are normalizing or trending negatively with more recent foreign policy concerns," Brandon Wilcox, a partner at S.W. Irvine & Associates, said in an email statement to Farms.com.

S.W. Irvine & Associates is a real estate appraisal firm located in Guelph, Ont. that specializes in agricultural properties and rural businesses, the company's website said.

"Uncertainty with what direction our trading partners to the south will (head) has tampered some economic growth," Wilcox said.

"Servicing debts and cash flow concerns have to be in the back of some farmers' minds as international trade sanctions have already impacted our soybean, canola and meat industries.

"That being said, growth has only slowed to more historic norms -- (growth) has not stopped in any of the regions I've appraised. I'm seeing more areas catching up to the higher land rate areas first impacted in 2014."

However, the farm debt-to-asset ratio in Canada remains lower than the 15-year average, the release said. So, many farmers could purchase land if such transactions are in their business plans.


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