Canadian Farmland 2013 Value Hike Biggest On Record

Farm Credit Canada says the average value of farmland in Ontario went up last year – but only about half a much as it went up in 2012.

The 2013 increase was 15 point 9 per cent – the 2012 increase was 30 point 1 per cent.

The average value of Canadian farmland was up 22 point 1 per cent in 2013 – the biggest single-year increase since the agency started reporting the data in 1985.

FCC Economist J. P. Gervais says the two most important drivers of farmland values are crop receipts and interest rates.

But he says recent long-term outlooks for crops suggest world stocks will rebuild, bringing prices closer to their long-term average.

Gervais says that will make margins tighter.

He’s also expecting interest rates will go up – eventually.

Gervais is sticking by his earlier forecast for the demand for farmland to slow down over the next several years, supporting a so-called soft landing.

He’s not expecting farmland values to collapse – just slower increases – with farmers facing potentially lower crop receipts.