Canada Markets

The cost of farmland has increased to record levels across Canada in the past year, according to RE/MAX, Canada's leading real estate company. In its RE/MAX Market Trends Report: Farm Edition 2013, the company reported higher land prices in 2013 in 15 out of 17 of the areas researched, or 88% in total.

The highest percentage growth was seen in Saskatchewan and Alberta. For example, utilizing the mid-point of the sales range provided in the report table, the per acre price for farmland in Northern Saskatchewan increased 52% from 2012 to 2013, while East Central Saskatchewan gained 19.6%, Central Alberta gained 52.6% and Southern Alberta gained 27.4%.

The strongest gains in the east were seen in Ontario's London-St Thomas area, with the various regions gaining anywhere from 14% to 60% from 2012 to 2013.

The highest per acre land cost in the country was in the Fraser Valley of British Columbia, where land prices have remained constant between $40,000 to $60,000/acre since 2011. The next highest land prices are seen in the South Simcoe region of Ontario, where land in the Holland Marsh and Bradford areas are trading $20,000 plus and $25,000 plus, respectively.

The major driver of land prices is suggested to be from existing farm operations that are expanding. "Be it a cash-cropper or a livestock farmer -- the economies of scale continue to support expansion. There are many buyers waiting in the wings, but momentum is hampered by some extent by a shortage of farmland listings," suggested Elton Ash, who is the Regional Executive Vice President of RE/MAX in Western Canada. Ash also mentioned that farmland investor activity has slowed.

In their work, RE/MAX acknowledges the challenges faced by the younger or less established producer as they try to compete. The trend to larger operations is one that is present right across the country.

Cliff Jamieson can be reached at cliff.jamieson@telventdtn.com

(ES)

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