The value of farmland in Alberta continues to climb at a steady rate, according to Canada’s leading lending agency for the agriculture sector.
Farm Credit Canada (FCC) has released its annual Farmland Values Report for 2018, showing a 7.2 per cent increase to the value of farm acres in Alberta over the year before. Overall, the report concludes, 2018 was another positive year for farmers and the agriculture industry, despite many weather- and climate-related challenges throughout the year.
“What we observe is that agriculture is still a pretty good place to hang your hat, and the market continues to move along without any major concerns in front of us,” said Robert McDonald, a senior appraiser for FCC. “We’re seeing a stable increase, year over year. We’re not seeing spikes or changes in the market that cause people to be very concerned.”
A driving factor in the increase in land values, according to FCC, is that producers are making fewer, but more strategic, investments in terms of their land purchases.
“Guys looking to expand their land base were looking for good quality land rather than just taking what was available at the time,” McDonald said. “We’re dealing with a commodity that is scarce, so…[producers] are not just going to buy whatever is out there, today – they’re going to make pointed decisions on whatever they want to do going forward.”
Lynn Jacobson, the president of the Alberta Federation of Agriculture, said the increasing land values bode well for older farmers.
“If you’re a younger farmer trying to get into farming, it’s getting more difficult to make that transition,” he said. “If you’re sitting on the other end, it’s good news if you’re trying to sell your land.”
For its report, FCC splits Alberta into four regions. Rocky View County is located in the central region of the province, where farm acres experienced a 5.9 per cent increase in dollar value last year. According to FCC, farmland in central Alberta varied between $1,400 and $8,500 per acre in 2018, depending on the quality of soil and land. The average value of farmland in the region was pegged at $4,109 per acre.
The region that saw the highest increase in the province was southern Alberta, the report indicated, where farmland experienced a 12.7 per cent spike in value. Roberts said the leading factor for that increase was the demand for irrigated land.
“We had a fairly warm and dry summer again, and if you could control the water, you had some pretty darn good crops,” he said.
In other parts of the province, such as northern Alberta, near Grande Prairie, McDonald said lingering smoke from wildfires in British Columbia and other weather- and climate-related incidents led to lower increases.
“Of course, we had a bit of a dry spring, and then in the fall, we had an early snow again,” he said. “We’ve had some weather challenges in the province that have caused a reduction from year-over-year in terms of the amount of the increase.”
FCC’s report also looked at Canada’s other provinces and territories, as well as the country as a whole. The report found farmland values in Canada rose 6.6 per cent in 2018, following gains of 8.4 per cent in 2017 and 7.9 per cent in 2016.
According to the report, most provinces – with the exception of Nova Scotia and Newfoundland and Labrador – saw the value of farmland increase last year. Nationally, values have increased each year since 1993.
“The report shows a continued confidence that people still have in agriculture and what it can do in the future – not only as a business, but also as a lifestyle and an investment,” Jacobson said.
To view the 2018 FCC Farmland Values Report and historical data, visit fcc.ca/FarmlandValues