Ontario land values continue to climb

Tuesday, April 17, 2012

by SUSAN MANN

Strong demand for land from Ontario dairy and large livestock producers partly contributed to the 7.2 per cent increase in average provincial farmland values during the second half of 2011, says a Farm Credit Canada spokesman.

Senior appraiser Dale Litt says the increase in values during the second half of last year was mainly due to demand far outweighing supply, favourable interest rates, increasing commodity and livestock prices and higher crop yields.

According to Farm Credit’s spring 2012 Farmland Values report released Monday, overall farmland values increased in nine provinces and remained unchanged in Newfoundland and Labrador.

About demand in Ontario, Litt says that’s coming partly from dairy farmers “as they continue to purchase additional land now instead of dairy quota.” Restrictions limited the ability of dairy farmers to expand their quota holdings and that fueled a demand for land instead during the last six months of 2011. There was also strong demand from large, intensive livestock operations to both satisfy nutrient management plan requirements and expand their current operations.

Increases in commodity prices and crop yields have continued to fuel the demand from cash crop operators, he says. “They want to buy more land because they feel there’s more return there.”

Litt explains it’s becoming increasingly more difficult for prospective buyers to satisfy their appetite for more land. He also notes there’s very little land being bought for investment in Ontario.

In the two reporting periods before the one covering the last half of 2011, Ontario farmland values increased by 6.6 per cent and 2.4 per cent respectively. Farmland prices in Ontario have been rising since 1993 and reached a peak increase of 8.2 per cent in 1996.

Ontario also had the second highest average increase in farmland values across Canada during the last six months of 2011 with Saskatchewan having the highest at 10.1 per cent.

Saskatchewan’s results appear to be in line with the pace of price increases in the United States where double-digit growth in farmland values have been reported in several corn and soybean-growing states, including Iowa, Kansas and Nebraska, it says in Farm Credit’s press release. BF