We know that land is a major asset in any farm operation. Knowing the value of property and understanding trends can be an advantage when you are contemplating buying, selling or transferring land.
FCC is committed to providing you with information to improve your farm management skills. One of our many services we provide is the Farmland Values Report. This report publicizes land values from across Canada twice a year on the FCC web site.
“We have been tracking this information for more than 20 years,” says André Tétreault, FCC Vice-President, Credit Risk. “We recognize land is a major asset for agricultural production and that information about land values can help producers and agribusiness operators make sound management decisions when they are looking to buy or sell property.”
The British Columbia and Alberta land markets remained strong with increasing demands in specific areas.
The BC land market has shown a strengthening trend in the last three years. However, the strongest performance occurred in the last six months. Increasing land values were influenced by the influx of retirees, the associated growth in businesses and jobs, demand for fruits, woodlot/forestry, livestock production and the limited supply of land and the dense population with an attractive climate.
In Alberta, land values remained strong throughout most of the province, rising 4.4 per cent in the last six months of 2004 and continuing the trend of increases established over the last 10 years. The total increase in the last two six-month periods, covering all of 2004, is 8.8 per cent. This is only exceeded by the growth rate in BC of 9.2 per cent in 2004.
Both agricultural related issues and non-agricultural issues fuelled this general trend in Alberta. A buoyant economy resulting from spin-off from the oil and gas industry continues to feed purchasing power. Many lifestyle purchasers and family farm members have good off-farm income providing the opportunity to acquire property.
The BC and Alberta increase helped drive the average value of Canadian farmland by 2.2 per cent in the last six months of 2004. This is stronger than the 1.5 per cent increase in the last half of 2003 and only 0.1 per cent lower than during the first half of 2004. Land value increases have been holding in this range since January 2002.
“Despite highly-publicized challenges in specific sectors of agriculture, land values held strong in most areas. Rising land values generally indicate strength in the agricultural industry,” explains Tétreault.
Farm income continues to have a direct effect on land values, but other current issues must also be factored in.
Technology
Technology has allowed farms to increase in size by assisting owners to maintain or achieve a desired income level per farm unit. This income has enabled them to be able to acquire more land at prices higher than what a smaller producer may be able to afford.
Interest Rates
Interest rates and credit terms are important considering many producers finance farmland purchases with debt or borrowed capital. Producers must take into account the carrying cost of land when they are making their decisions.
Buyer Motivation
We know that the average age of Canadian producers is such that more farmland will be changing hands in the next 10 to 20 years as producers retire. As property in close proximity becomes available to purchase, many farmers are paying top dollar to have the convenience of the adjacent farm.
Finite Resource
As a finite resource, the price of land is driven by factors related to supply and demand. In desirable areas of the country, for example in the Okanagan Valley, or near the urban fringe, those who want the lifestyle that comes with owning property in a rural setting are willing to pay.
Environmental Laws
In some areas, land demand for nutrient management purposes and over-production of animal waste has contributed to the rise in land values. For example, some livestock producers have expanded their land base to meet the environmental standards of animal waste production. Consequently, producers have become extremely active in the farmland marketplace.
If you are buying and selling property you may wish to check out up-to-date land values in or near your specific rural municipality. FCC provides this service for free at Farmland Values Online.
“All you have to do is register and you can access the information at any time,” says Tétreault. “The information is free, easy to access and one of over three dozen products and services we offer to help producers succeed.”
For more information, contact:
Melanie Lightfoot
Corporate Communication
Farm Credit Canada
Regina, SK
(306) 780-6987
melanie.lightfoot@fcc-fac.ca
Mireille Bilodeau VongPhit (bilingual)
Corporate Communication
Farm Credit Canada
Regina, SK
(306) 780-8630
mireille.bilodeauvongphit@fac-fcc.ca
