The average value of Ontario farmland increased 9.4 per cent in 2017, slightly ahead of the national gain of 8.4 per cent the latest price report from Farm Credit Canada (FCC) says.
“Ontario’s farmland value increases continued to be fuelled by the strong demand from supply-managed farm operations and cash crop producers competing for a limited amount of available land,” the FCC report says. It also cited growth in the dairy sector that motivated some producers to seek more land. Favourable growing conditions and crop yields prompted expansion by cash crop farmers.
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Overall, Ontario farmland saw the third highest percentage increase in Canada, next to Saskatchewan at 10.2 per cent and Nova Scotia at 9.5 per cent.
The 2017 rise in Ontario farmland prices is a big jump over 2016 increases of 4.4. per cent but a far cry from the record increase of 30 per cent in 2012.
Prices were hottest in the northcentral region of the province, with increases of 24 per cent. Southeastern Ontario saw increases of 15.6 per cent, south central 15.1 per cent and northwestern region 11 per cent. The remaining regions posted single-digit increases except in the north, which was unchanged.
J.P. Gervais, FCC’s chief economist, said the bump in prices last year does not signal a return to the double-digit growth rates of 2011 to 2014. “Rather, it’s a sign of a stable and strong farm economy,” he said.
He said farmers nationally harvested record crop receipts in 2017, and although interest rates have seen some modest increases, they remain relatively low. That said, most of the farmland transactions recorded last year took place prior to interest rate increases posted in the latter half of 2017.
“Recent increases in borrowing costs and expectations of further increases could cool the farmland market in 2018,” the FCC report said.
