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Better Farming Ontario magazine is published 11 times per year. After each edition is published, we share featured articles online.


Rate of growth in agricultural land values is slowing

Wednesday, February 18, 2015

by JIM ALGIE

Rising agricultural land values in the 10 counties of southwestern Ontario moderated during 2014 mainly because of lower commodity markets, an annual report by London-based appraiser Ryan Parker says.

The 32-page report concludes average prices rose only four per cent across the region, compared with year-by-year increases since 2010 of between 20 and 30 per cent.

Available online at ValcoConsultants.com, the report analyses agricultural land sales for a region bounded by Lake Huron on the west, Lake Erie on the south and northeast to the six southern townships of Grey County. A partner in Valco, Parker identifies signs of a slowdown in demand and “some signs of market stress” in “glaring contrast” to recent years.

Livestock farming operations in supply-managed commodities continue “to have a large impact” on land markets in some areas, notably, Huron, Perth and Oxford counties, Parker’s report says.

“These are areas where the dense proportion of livestock/quota producers kept land values strong even in the face of lower commodity prices,” the report says.

Historically low interest rates “have allowed for substantial expansion by large, progressive agricultural producers,” the report says. A recent change in the outlook for interest rates suggests they’ll remain low and “continue to provide a strong appetite for agricultural land” in 2015.

Parker’s report predicts agricultural land values in the region will “continue to be very strong with overall level values” and significant variability depending on individual properties. He expects “fewer sales and more listings” in 2015 “if the market continues to tighten up.”

The report includes median land values for each county. They show Perth and Oxford counties with the highest median value per tillable acre at $17,000.

Huron County comes in just under $13,000 with Middlesex and Kent at $12,000. The median value for Elgin and Lambton counties is $10,500 and $10,000, respectively, while Essex, Bruce and south Grey all show up at just under $8,000.

Bruce, Lambton and Elgin counties show the largest average annual increase since 2010 at between 22 and 28 per cent. Parts of Perth, Middlesex and Huron counties have showed even stronger growth over the past four years of between 24 and 25 per cent.

Parker’s report identifies top end sales in 2014 at between $20,000 and $25,000 per acre. While bottom end ranges in most areas continued to rise, the research also indicates some reduction in value for parts of Perth, Lambton and Bruce counties.

Parker’s analysis selected sales to reflect demand for land used solely for farming. The average number of sales analysed was 27 and ranged from a high of 42 transactions in Kent to a low of only 17 in Oxford. BF

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