Farmland values increase in Manitoba

Posted By Farm Credit Canada

Posted 28 days ago

It was a scene of rural meets urban as a local R.M. of Rhineland farmer finished up some combining with the Town of Altona as a backdrop last week.

The average value of farmland in Manitoba increased by 5.5 per cent in the first half of 2009, according to the semi-annual Farm Credit Canada (FCC) Farmland Values Report released earlier this month.

This is the third consecutive semi-annual increase and follows increases of 4.2 and 6.2 per cent in the two previous reporting periods. On average, Manitoba farmland values increased almost one per cent per month over the 18-month period. Manitoba is the only province that experienced this trend.

The most recent increase was due in part to continuing favourable interest rates, which resulted in ownership cost being similar to or lower than renting. In addition, pent-up demand, good commodity prices in fall 2008 and winter 2009, a drop in production costs and purchases of farmland by foreign buyers contributed to the increase.

The areas where there was limited to no increase in farmland values were in the very wet Interlake area, the very dry southwest and areas where beef production is predominant. Land used for grain and specialty crops led the way in price increases, while prices paid for bean and potato crop land continued to maintain high values for Manitoba farmland. Land used for beef production experienced the smallest price increase.

Hog depopulations affected the increases previously experienced in the southeast region, where demand for manure spreading land competed with beef farms.

In the dairy area around Steinbach, land prices continued to rise in value due to demand created for the spreading of manure and forage production.

The complete report is available at www.FarmlandValues.com.

Overall, the average value of Canadian farmland increased 2.9 per cent during the first six months of 2009. The 12 months from June 2008 to June 2009 saw large fluctuations in prices for agriculture commodities, oil and gas. This created uncertainty in the marketplace and in the agriculture sector. However, in the last three semi-annual reporting periods, farmland values in Canada have increased by 5.8, 5.6 and 2.9 per cent.

“Several factors can impact the crops every year in Canada, the weather being the most important one followed by the commodity prices and the variable demand for food and biofuels. The quality of Canadian farmland remains amongst the best in the world but Canadian producers work with a short growing crop season and variable weather conditions. These two factors have a huge impact on the production and the value of the land,” says Rémi Lemoine, FCC Senior Vice-President, Portfolio and Credit Risk. The evolution of farmland values across Canada is an indicator of how producers react to market dynamics. “Farmland values data presented in our biannual report gives an indication of how the market is evolving. It helps Canadians make farm business management decisions and informed choices about acquiring, holding or selling agriculture land,” says Lemoine.

The biannual FCC Farmland Values Report has been published since 1984.

As Canada’s largest provider of business and financial services to farms and agribusiness, FCC advances the business of agriculture. Operating out of 100 offices located primarily in rural Canada, FCC employees are passionate about the business of agriculture.