The 2019 rise in Canadian agricultural land values followed gains of 8.4 and 6.6 per cent in 2017 and 2018, representing a five-year trend of tempering growth in average farmland values, corresponding to Farm Credit Canada estimates.聽
In Saskatchewan,聽farmland values had grown by 6.2 per cent in 2019, following declining gains of 7.4 per cent in 2018 and 10.2 per cent in 2017, representing a gradual downward trend since the heights of 2015-2016.聽
鈥淭he days of sharp increases in farmland values continue to be replaced by more modest growth,鈥澛爏aid J.P. Gervais, the FCC鈥檚 chief agricultural economist. 鈥淐hanges in commodity prices, uncertainty around global trade and some challenging weather conditions may be tapping the brakes on an otherwise healthy and robust Canadian agriculture industry.鈥澛�
Moreover, the COVID-19 pandemic has made the current economic environment even more volatile for farm operations and business owners in the country鈥檚 food value chain.聽
鈥淕iven the uncertainty, I expect farmers, ranchers and food processors to continue being careful with their investments,鈥� said Gervais.
Also, the challenging weather in recent years has made farming operations more costly, especially when the softening land values are measured against declining gross revenues. The ratio of the average farmland price to actual revenues per acre in Saskatchewan was 4.4 in 2019 versus 4.1 in expected revenues in accordance with FCC figures.
鈥淲e鈥檝e noticed producers have been running into delays in harvest,鈥� said Amer Tuplin, Senior Appraiser of Valuation and Environmental Risk for the FCC, when discussing how the weather has affected recent harvests, land values and gross revenues. Tuplin noted that farmers and ranchers in south central and southeastern Saskatchewan were selling off land further away from their main operations in an effort to consolidate their main operations as response to the reduction of land values and annual drops in overall revenue.聽聽
