(Comments refer to information gathered between January 1, 2004 and July 1, 2004.)

Welcome to Farm Credit Canada's Fall 2004 Farmland Values Report. Farm Credit Canada (FCC) is Canada's largest provider of business and financial solutions to Canadian farms and agribusiness.

Introduction | Methodology | National trend | British Columbia  Alberta
Saskatchewan | Manitoba | Ontario | Quebec | New Brunswick
Prince Edward Island | Nova Scotia | Newfoundland and Labrador
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Farm Credit Canada is Canada's largest agricultural term lender. Operating out of 100 offices located primarily in rural Canada, the corporation's employees are passionate about the business of agriculture and serve over 45,000 customers. FCC offers some three dozen products and services to help primary producers and agribusiness operators succeed. These include not only financial products, but also software and information to improve farm management skills, educational scholarships, insurance and AgriSuccess farm management workshops. FCC's healthy portfolio of $10 billion and 11 consecutive years of portfolio growth are a reflection of its customers' success.

In 1985, FCC established a system of 245 benchmark farm properties to monitor variations in bareland values across Canada. Since 1990, benchmark properties have been appraised semi-annually at January 1 and July 1. These selected parcels represent the most prevalent classes of agricultural soil in each census district. The benchmark properties are zoned for agriculture and represent current land use. Weighting is assigned to each property and to each province, based on the improved farmland area recorded by the 1996 Census of Agriculture.

FCC appraisers estimate market value using recent bareland comparable sales. These sales must be arm's length transactions. Once sales are selected, they are reviewed, analysed and adjusted to benchmark properties. Individual values are reconciled before accredited appraisers review the appraisal reports.

British Columbia land market value trends have been up and down over the last 10 years. Recently, we've seen modest increases in land values with a strengthening trend of 4.2 per cent from January to July 2004.

Provincial land values are a summary of a number of distinct markets with unique factors affecting each area.

The Lower Mainland, near Vancouver, has a dense population with attractive climate and good quality land suitable for intensive cropping. One of the main crops in the area is small fruit such as blueberries. Land values in this area are high and prospects of good returns has resulted in continued strength in land prices.

The Okanagan Valley produces larger fruit such as apples, cherries and grapes. Land suitable for producing these types of crops is limited and is often selected based on micro climates. Due to limited supply, land values have increased on this property.

The B.C. Interior generally includes a wide range of productive land including areas for woodlot/forestry and livestock production. While the lumber industry showed some optimism, the results of the U.S. border situation and BSE resulted in very few ranches being sold. Land values are somewhat difficult to determine under these circumstances, but there was downward pressure on the market.

The B.C. Peace River area around Dawson Creek and Fort St. John continued to show stable to increasing land values. This was largely due to spin-off from a strong oil and gas industry.

View graph of provincial Farmland Values trends for the past 10 years.

Land values continued to increase throughout most of Alberta, leading the country at 4.4 per cent and maintaining an over 10-year trend. As a point of interest, the rate of increase in the past five years has been less than the previous five years. Land auctions have been strong over the past six months. There continues to be good demand for cultivated land. This has been enhanced by relatively good moisture conditions in most areas of the province. Irrigated land values were stable to slightly upward. Land rental rates have generally remained strong.

With the significant number of cattle in Alberta, the potential impact of BSE on land prices continued to by closely watched in many communities.

While no detailed analysis was conducted on grain land versus pasture land, the beef industry appears to be in a holding pattern.

Alberta's economy remains strong with the spin-off from the oil and gas industry continuing to increase the value of land in surrounding areas, as well as major cities and larger communities.

View graph of provincial Farmland Values trends for the past 10 years.

Land values in Saskatchewan continued to increase for the fifth consecutive six-month time period. This followed a three-year slump between 1999 and 2002. Since then, the rate of increase has been modest - in the one to two per cent range each six months. The increase of 1.1 per cent from January 2004 until July 1, 2004 holds true to the trend.

Land values varied throughout the province. While relatively stable values were noted in most areas, there was a stronger upward price trend in specific areas of strong competition.

Good moisture conditions in most areas supported spring land sales. In addition, lower interest rates and some optimism about grain and oil seed prices supported the market.

Farms continue to get larger to take advantage of economies of scale and those buying land are willing to pay to complete a land package or buy nearby property.

With some of the lowest average land values in Western Canada, Saskatchewan attracted land buyers from outside the province. However, the trend has recently tapered off with concerns about BSE and cattle markets.

View graph of provincial Farmland Values trends for the past 10 years.

Manitoba land values continued to increase at a modest rate of 1.3 per cent.

The 10-year trend in Manitoba closely matches the pattern in Saskatchewan with modest increases in the last five six-month reporting periods.

Values for land growing cereal grains, oilseeds and forage remained relatively stable in most areas. Prices for land suitable for special crops continued to be a factor in driving the market upward. There are substantial increases in land values when potato production is expanding into areas that has been used for cereal grains or forage. Some of these areas with lighter soils are now selling at three to four times the price. Many of these situations also require additional investment in irrigation equipment and infrastructure.

View graph of provincial Farmland Values trends for the past 10 years.

During the first six months of 2004, land values continued to move upwards in many parts of Ontario. This resulted in an average 3.4 per cent increase across the province. This was the third highest average increase across Canada, following Alberta at 4.4 per cent and British Columbia at 4.2 per cent. Ontario led growth in land values during the last half of 2003 by posting a 3.3 per cent increase.

Land was purchased to accommodate expansion in traditional livestock (dairy/poultry/hog) areas, notably Huron, south Bruce, Wellington, Perth and Oxford counties. Another important factor in the demand for land was the need for producers to comply with regulations for nutrient management plans. Traditional cash crop sectors in the southwest area of Ontario saw increases as well, driven partly by demand for vegetable production - primarily processing tomatoes.

In the commuting zones around the GTA (Greater Toronto Area), "lifestyle" farmers buying farms for housing often pushed land values higher, particularly in Simcoe county and east along the lake to the Bay of Quinte area.

From January 1 until July 1, 2004, eastern and northern regions of Ontario showed little change in land values.

View graph of provincial Farmland Values trends for the past 10 years.

Farmland values in Quebec increased by 1.3 per cent, during the first six months of 2004.

These are challenging times for Quebec's agricultural industry. The decrease in net income and ensuing impact on cash flow are contributing to limited demand for farmland.

In areas were there is a high concentration of livestock, upward pressure on land prices has been maintained as producers look to acquire land in order to meet environmental standards. Land values along the urban fringe are also increasing more rapidly, resulting in a cascading effect on neighbouring rural areas. The increasing popularity of part-time farming is also placing upward pressure on land values.

View graph of provincial Farmland Values trends for the past 10 years.

Average land values increased 2.9 per cent in New Brunswick between January 1 and July 31, 2004. In the south-central portion of the province (Kings County) - primarily dairy enterprises - there was a slight increase. This was driven mainly by dairy farmers acquiring more land for forage and grain production.

Increased demand for land for potato farming in the Woodstock area continued to push land prices higher, just as it did in the previous six months. Growers in this area have experienced several years of reasonable yields and prices and they are buying land for crop rotation and to expand their operations.

View graph of provincial Farmland Values trends for the past 10 years.

Increases in land values appear to have leveled off on Prince Edward Island prices remained steady in the first six months of 2004.This reflects recent challenges in some of the major commodities produced on P.E.I, such as potatoes, beef and hogs.

Demand for crop land has dropped from past levels, resulting in more stable land prices.

While there are still strong prices in Prince County, there are fewer sales happening than in past years. Land sale activity in Queens and Kings Counties has also slowed down.

View graph of provincial Farmland Values trends for the past 10 years.

Nova Scotia land values remained steady from January to July 2004. In central and eastern areas, there were no major changes affecting land values. Quality land remains in demand by expanding operators.

In the Annapolis Valley area, an increase in the supply of crop land for sale occurred. With no corresponding increase in demand, prices remained flat. Overall, land sales activity in Nova Scotia appears to be less than in past years.

View graph of provincial Farmland Values trends for the past 10 years.

There was no change in land values during the first six months of 2004 in Newfoundland. The land market was relatively quiet. The few sales noted do not indicate any change in value.

Dairy producers remain the major land buyers, reflecting their stable income from a supply-managed commodity.

Lifestyle farmers are acquiring land in the eastern part of the province.

A stable land market enables farmers who wish to expand to plan their purchases. Another alternative to purchasing land is to clear, de-stump, level and seed un-developed land – although costs for this process often run higher and productivity takes longer to realize.

View graph of provincial Farmland Values trends for the past 10 years.