Despite difficult economic challenges throughout 2023, including a drop in field crop production due to drought, high input costs, and high-interest rates, Farm Credit Canada says farmland values remain resilient.

The FCC Farmland Values Report shows an average increase of 11.5% in cultivated land values in 2023. That’s slightly below the average growth recorded last year but the second-highest increase since 2014.

Provincially, Saskatchewan saw the highest increase in average farmland value at 15.7%. Quebec was right behind at 13.3%. Manitoba rounds out the top three with an 11.1% increase.

The remaining provinces were below the national average, except for British Columbia, which recorded a noteworthy decrease of 3.1%. The FCC report notes that regions with higher per-acre values in B.C. experienced the most significant drops in land values. 

RELATED: Canadian Farm Income Hits Record High in 2023, Forecasts Dip for 2024

An examination of crop receipts, particularly in the field crop sector, highlighted growth in Saskatchewan and Manitoba, indicating a positive correlation between receipts and land value appreciation. This correlation underscores the importance of liquidity in driving purchasing power and farmland demand. The robust financial health of Canadian agriculture until 2022, with ample current assets to meet financial obligations, further substantiates the sector’s resilience. 

Looking ahead, the FCC projects a continuation of farmland market growth against a backdrop of tighter profit margins for grain, oilseed, and pulse operations. Borrowing costs will likely remain high even withd potential adjustments in the Bank of Canada’s policy interest rate. 

An upcoming analysis will delve deeper into the evolving dynamics of farmland affordability amidst these economic conditions.