Despite a global pandemic, the average value of Canadian farmland increased by 5.4 per cent last year, up marginally from the 5.2 per cent increase in 2019, reports Farm Credit Canada.
In Ontario, the average farmland values increased by 4.7 per cent compared with 6.7 per cent in 2019.
FCC said 2020 was a challenging year that will go down in history for the economic disruptions caused by the COVID-19 pandemic.
The consequences, however, were not as prominent in the real estate and agriculture land markets, compared to most other parts of the Canadian economy, it said.
Crop sectors have done well, and demand for farmland across Canada remained strong.
In the first six months of 2020, there was a noticeable decrease in the number of sales, mostly in April and May. However, the total number of sales for the entire year was similar to the past few years.
Demand from large, intensive, supply-managed farm operations, cash crop producers and part-time farmers all played a role in Ontario’s land value increases, FCC said. There was also a scarcity of land for sale.
Farmland on the outskirts of urban centres or within close commuting distance to larger urban areas also drew more demand from part-time farmers, rural residents and private investors.
The most significant growth in average farmland values was observed in the Central East and Midwestern regions, which both reported increases of 8.9 per cent while the Central West had an increase of 8.2 per cent.
Demand was growing in areas with limited supply and the sale of several smaller rural parcels. There were some small decreases in parts of these regions, such as in the northern section of Central West region, FCC said.
The most significant increases in Central East were experienced in the traditionally lower- priced areas located in the most eastern part of the region.
The Eastern region had a 6.4 per cent increase, compared with a 2.3 per cent increase in 2019. Increases were experienced mostly in the lower-priced areas of the region, with more stable values in higher-end areas. There was limited sales data available, as supply of available land was limited.
There was an overall increase of 5.5 per cent in the South East region, with limited supply and stable demand. Growth in value was mostly observed in the eastern and southern parts of the region.
British Columbia led the nation with an average increase of eight per cent. New Brunswick with an increase of 1.3 per cent, Nova Scotia at 1.6 per cent and Prince Edward Island at 2.3 per cent ranked lowest in Canada.