Tuesday, September 28, 2021

Farmland prices defy drought, COVID-19

Farmland prices are holding up, said G.P Gervais, chief economist for Farm Credit Canada.

“While the drought across most of Western Canada and the pandemic have captured most of the headlines, strong commodity prices and low interest rates have been quietly supporting a vibrant farmland market for the first six months of 2021,” he said.

“Higher-than-normal prices for wheat, canola and corn have improved the profitability of many operations in the second half of 2020 and early 2021, putting them in a better position to invest in farmland as the opportunities arise,” he said.

Ontario prices are up by more than 11 per cent over the last six months and by more than 15 per cent over the year from June 30 to July 1, 2021, probably because only a small percentage of Ontario farmers experienced drought stress.

The national average increase was 3.7 to 3.8 per cent over those same time periods.

Livestock farmers did not fare nearly as well as cash croppers.

Gervais is advising farmers to become cautious about buying land now because interest rates seem poised to increase.