by SUSAN MANN
It may be a long wait for farmers who are delaying land purchases until farmland values drop. During the first six months of this year prices in Ontario rose almost seven per cent.
In fact, farmland values in Ontario have been going up for the past 18 years,
since 1993, according to Farm Credit Canada’s recently released Farmland Values report.
During the first half of this year, the average value of farmland in Ontario increased by 6.6 per cent. In the previous two six-month periods, farmland values in the province increased by 2.4 per cent and 4.3 per cent respectively.
Dale Litt, a senior appraiser with Farm Credit, says most of the land price increases were in southwestern and northern Ontario, while in eastern and southern parts of the province land prices increased minimally or stayed stable.
Across Canada, the average value of farmland increased by 7.4 per cent during the first six months of this year. That’s up from increases of 2.1 per cent and three per cent in the previous two six-month periods. Farmland prices remained stable or increased in all provinces with Saskatchewan having the highest average increase at 11.6 per cent.
Factors contributing to increased land demand among farmers that push prices up are: low interest rates, good crop prices in recent years and low returns in financial markets.
As for where prices are headed, Litt says all of their information is based on historical data. Farm Credit officials can’t predict where prices are going.
But as long a long as interest rates stay low, crop prices remain high and financial markets continue generating low returns, there’s nothing that says farmland prices won’t keep increasing, Litt says. “That’s basically gazing into a magic ball. It’s pretty hard to nail down whether it’s going to increase or decrease.”
Farmers often ask Farm Credit officials if they should buy land now or wait until prices decline. Litt says producers need to weigh the benefits of both renting and buying. “It’s a personal preference for them and the situation they’re in now.” BF
Comments
Challenge or a to hot to handle potatoe
Better Farming is pleased wirh their summary of Pidgeon King story.
Better Farming tells about Farmland prices are on a roll
We all know how in 2008 cheap USA cheap housing loans just about brought the economy down from commeriacl Banks to General Motors, and now we have the Economic Crisis in Europe With the new manager of the IMF warning that the world economy needs repair or deep recession will follow
Baby boomer farmers want high land selling prices to retire on while others use it as their net worth bragging rights to banks so they the farmers can leverage capital purchases
What will happen if bottom falls out of the economy and farm economy? All land in Canada is owned contolled by the crown by royal decree backed by the constition and old law land patents. Does farmers have property rights?
Better farming do a story on how farmers can justify purchasing expense land say $9000 per acre then on top of that puting in same year tile drainage at a cost of say $1500 PER ACRE.
The old story is you bulk all your acreage together to pay off your new purchaced $10000 acre, but what about that young want a be farmer who has no bulk acres
So Better Farmig are you going to wait or be proactive to help preview a melt down? Is Ontario farm land prices Canada's screw up like the USA 2008 situation?
Better Farming get a group of financial experts together and tell us how farmers can pay off the cost per acre with interest,... growing grain crops.
Were is the yearly farmer profit to buy $10000 land? were is Revenue Canada?
Is FCC financing most of this land and with interst only payments for some time what kind of other lending institution or business runs under these rules
If Interest rates go up will lean holder forgive loans with write downs?
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