Canadian farmers saw their farm equity climb 6.9 per cent last year compared to the year before and Farm Credit Canada’s principal agricultural economist said that falls in line with FCC’s analysis.
Data released by Statistics Canada in June reported 2017 farm equity climbed $36.4 billion to $535.3 billion, compared to $500.75 billion in 2016.
“I think it points to an industry where we’ve come off of some good times over the past five-plus, 10 years, and we’re continuing to see a little bit of slowing on some perspectives,” said Craig Klemmer.
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“But also, I think there is still optimism in the industry.”
While he projected a slowdown in growth, he said farm asset values will continue to appreciate.
According to the StatsCan report, farm asset value rose 6.9 per cent compared to the year previous, to $632.2 billion nationwide in 2017, mostly due to higher farmland values. Farm real estate climbed by 7.8 per cent to $480.1 billion and now accounts for more than three-quarters of total farm asset value.
Klemmer said a recent FCC report showed farmland values rising by 8.4 per cent, so the two reports taken together indicate that investors are seeing opportunities.
“I think, overall, where we’re sitting right now, is that we’re seeing a very balanced, stable market, where assets are increasing, revenue is increasing and debt is increasing, in kind of a fairly stable trajectory at this point.”
He said market disruptions and trade concerns will affect farm revenue and need to be monitored. As well, the Bank of Canada has said it will raise interest rates this year, which will increase the costs of borrowing and could stress farmers’ abilities to pay down debt.
But he added the farm-debt-to-asset ratio points to a healthy industry. That ratio reached 15.3 per cent in 2017, according to the StatsCan report, slightly more than the five-year average of 15.2 per cent.
“So, I think there are some pretty good stories,” Klemmer said.
Nationwide for 2017, farmers recorded assets of $632.2 billion with liabilities of $96.9 billion.
Ontario farmers recorded assets of $173.6 billion in 2017, which is up from $160.7 billion the year previous and $134.4 billion in 2013. Total liabilities for 2017 were $26.3 billion and equity was recorded at $147.3 billion.
Ontario farm real estate for 2017 was valued at $141.7 billion, compared to $129.5 billion in 2016 and $105.4 billion in 2013.
Manitoba farmers recorded assets of $50 billion with liabilities of $9 billion; Saskatchewan farmers realized $114.4 billion in assets compared to $14.7 billion in liabilities and Alberta posted $173.4 billion in assets and $22.4 billion in liabilities.
Farm inventory values also rose, contributing to the overall increase in asset values.
The total value of crops, livestock, inputs and poultry increased six per cent from 2016 to $47.3 billion. It marked the first year inventory values have increased since 2014.
Farm inventories of market livestock and poultry increased the most, rising to $8.7 billion, a 7.2 per cent increase from 2016. The increase was credited mainly to higher prices for calves, which rose 6.4 per cent and steers, up 5.2 per cent.
Breeding livestock inventory values increased 5.2 per cent to $13 billion, on the back of higher beef cow prices (up 4.8 per cent) and milk cows, which were up 4.1 per cent.
Higher year-ending stocks for canola and soybeans were cited as the main reason for the increase in crop inventory values.
Soybean inventory value rose 44 per cent, while canola rose 9.5 per cent, compared to 2016.
Klemmer said those numbers point to the growing popularity and the high value of those two crops.
He added that many farmers may be holding crops in their bins longer, waiting for better prices.
Canola and soybeans made up 86.5 per cent of the 2016-17 increase in crop inventory value and 39.8 per cent of the total crop inventory values for 2017.
