Canada Markets

The long-term appreciation of farmland continued across Canada in 2014, as indicated in data released in Farm Credit Canada's 2014 Farmland Values Report on Monday. Overall, farmland in Canada rose 14.3% in 2014, a respectable increase despite being the smallest annual percent change reported in four years. FCC reports that the nation's farmland values have increased steadily since 1993.

Despite the country's 7.8% drop from a 22.1% gain in 2013, when national land prices reached the highest year/year percent change on record since 1985, the gain in 2014 is seen on the attached chart to be just above the 2009-to-2013 five-year average of 13.64%.

By province, Saskatchewan's gains led in 2014 with a percent change of 18.7%, down from the annual 28.5% increase reported in 2013 when the province also led the country in the appreciation of its land values. The reported increase of 18.7% in 2014 remains above the five-year average of 16.74% for the province.

Next on the prairies is the province of Manitoba, which has seen prices increase steadily since 1992. Land prices have increased an average of 12.2%, while facing the largest year/year decline in the annual increase of 13.4% from the 25.6% increase reported for 2013. This is below the five-year average increase of 14.4%.

The weakest prairie growth in 2014 was seen in the province of Alberta, where land gained 8.8% on average in 2014, while gaining steadily since 1993. On average, land prices gained 8.8% in 2014, a small correction from the 12.9% gain in 2013 while remaining on par with the five-year average.

Both Quebec and Ontario posted gains in 2014, in line with their long-term trends with Quebec reporting annual land price gains since 1986 and Ontario since 1988. Land prices in Quebec increased 15.7% in 2014, second only to Saskatchewan and ahead of the five-year average gain of 13.98%. Land prices in Ontario gained 12.4%, below the five-year average gain of 14.66%.

One can only speculate if the long-term trend of annual increases in Canada's land values will continue in 2015. Producers could be faced with lower commodity values along with increasing costs. The government of Saskatchewan announced Monday a review of ownership rules, with both investors and pension plans unable to make purchases during the review period, with a consultation process to be created to allow for private submissions. The Canada Pension Plan's purchase of Saskatchewan farmland is just one of many hotly contested transactions which have taken place in the province.

The Canada Federation of Independent Business March Business Monitor pegged the month's Business Barometer Index for agriculture at 56.4, the third-lowest ranking of the 13 industry groups reported in the study each month. The country's index for all industries combined is reported at 61.5%. This is the highest reading reported so far in 2015 for agriculture, but is lower than the 59.1 reported in March 2014 and the 2014 average of 59.95.

Indexes above 50 suggest that business owners expecting stronger business performance in the year outnumbers those that are expecting a weaker business performance for the year. An index between 65 and 70 would suggest a business environment which is growing at potential.

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

Follow Cliff Jamieson on Twitter @CliffJamieson

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