Alberta farmland values remain strong

Mar 16, 2021 | 12:56 PM

LETHBRIDGE, AB. — During a year marked by economic upheaval due to the COVID-19 pandemic, Canada`s farmland market remained strong and stable in 2020. That upheaval included temporary food processing plant closures, some displaced exports, sector-specific labour shortages and significantly altered consumer buying habits.

The latest Farm Credit Canada (FCC) Farmland Values Report found national farmland increased by 5.4 per cent in 2020, slightly more than the 5.2 per cent increase reported in 2019.

FCC Chief economist, J.P. Gervais, notes, “Since land is the most valuable asset on any farm operation, the agriculture land market is a good barometer for measuring the strength of Canadian agriculture. Despite having gone through a uniquely volatile year, farm income generally improved and the overall demand for farmland remained strong throughout 2020.”

GervaiS says producer investments in farmland are a reflection of their confidence and optimism.

“Agriculture presents opportunities as producers seek to expand, diversify or transfer their operations to the next generation.”

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The highest average provincial increase for farmland in 2020 was in British Columbia and Quebec, with averages of eight and 7.3 per cent, respectively.

Alberta had the highest average increase in farmland values on the Prairies, with a six-per-cent increase and Saskatchewan mirrored the national average increase of 5.4 per cent.

Manitoba had the smallest increase outside the Atlantic provinces at 3.6 per cent.

Given the uncertain economic environment, Gervais recommends farmers, ranchers and food processors continue to thoroughly evaluate their investments and have a risk management plan.

“The pandemic has underscored the value of having a comprehensive risk management plan that covers all risks areas: production, marketing, financial, legal and human resources.`

Gervais went on to explains, “Farm operators need to have the financial ability to protect their operations from the potential impact of risks that may not be on their radar. Fluctuations in commodity prices and interest rates and/or unforeseen variations in production can diminish the ability to safeguard and build equity in the operation and successfully meet cash flow requirements.”

by Dori Modney