The average value of farmland in Ontario increased by 3.3 per cent in the second half of 2009, following gains of 2.8 and 1.9 per cent in the two previous reporting periods, according to the Farm Credit Canada (FCC) Farmland Values Report released April 12.
Published twice a year, the report provides information about changes in land values across Canada. Ontario farmland values have been rising since 1993 and increased by an average of 0.5 per cent per month during 2009.
Overall, the average value of Canadian farmland increased 3.6 per cent during the last six months of 2009. Farmland values remained the same or increased in each province. Manitoba experienced the highest average increase at 5.9 per cent.The complete report is available at www.farmlandvalues.ca.
In Ontario, values increased by an average of 0.5 per cent per month from January 2008 to December 31, 2009. Farmland values in Ontario have been rising since 1993.
Positive value gains were consistent across the province with small increases noted in eastern and northern Ontario. The demand for land was fuelled by cash crop operations. Worldwide supply, demand for grains, and strong growth in the biofuels sector also contributed to the increase in crop prices. Large and intensive livestock enterprises continued to have strong demand for land to expand their operations and satisfy nutrient management program requirements.
Land continued to be in demand by local livestock farmers and international buyers.
Wind turbine contracts continued to have an upward effect on land values in the Lake Huron area. That resulted in premium prices being paid for farmland parcels in that area, due to additional income generated by the contracts.
Urban dwellers relocating to the country to purchase or develop hobby farms continued to have a marked effect on land values in southern Ontario. That trend was expected to continue in the foreseeable future.
Land rental rates also increased as land owners seek a share of the cash crop revenue increases. A recent FCC Vision Panel survey showed that almost six in ten producers (58 per cent) both own and rent the land where their production is located.
The survey, completed in November 2009 by 971 producers across the country, revealed that almost half of producers who indicated that they rent some or all of their land (45 per cent) rent more land now than five years ago.
However, producers from Quebec (55 per cent) and the Atlantic provinces (60 per cent) are significantly more likely than most other provinces to report that they are renting about the same amount of land as they were five years ago. For more detail about the FCC Vision Panel survey findings, visit www.fccvision.ca/research.
Low interest rates, good grain prices and high yields generated demand for Canada’s high quality farmland. In the last three semi-annual reporting periods, farmland values in Canada increased by an average of 5.6 per cent in spring 2009, 2.9 per cent in fall 2009 and 3.6 per cent this spring.