-10 C
Saturday, January 18, 2020
Their View / Opinion

How much is that field next door worth?

Weather has taken some of the steam out of land prices here.

Farm Credit Canada, the biggest agricultural lender in the country, says Ontario, British Columbia, Alberta, Saskatchewan and Quebec are showing lower increases in farmland values for the first half of 2018.

FCC says the national average for farmland values fell from a 6.6 per cent increase in 2018 to a three per cent increase in the first half this year.

Now, that’s still an increase, much better than a free fall that would take the buoyant market into the tank.

But no one thinks that’s going to happen.

“There might be some minor market adjustments along the way, but the days of sharp increases in farmland values have been replaced by more modest growth,” said J.P. Gervais, FCC’s chief agricultural economist. “Demand for Canadian agricultural products is projected to remain strong at home and abroad in 2019-20, so there is a long-term positive future in agriculture.”

Indeed, the short term does not have industry observers feeling warm and fuzzy about land prices. Don Kabbe, general manager of Great Lakes Grain in Chatham, says weather took some of the steam out of land prices there.

“Ontario has been hit with a challenging growing season with delayed planting and less heat this summer, resulting in lower than expected crop yields,” Kabbe says. “It’s slowed from the high of 2011-2015.”

University of Guelph research Prof. Brady Deaton Jr. says prices came in about where farmers expected them. Deaton, who holds the McCain Family Chair in Food Security, polled Ontario farmers about their perceptions regarding changing farmland prices in 2019.

Almost half of the respondents thought prices would stay the same, while nearly 30 per cent thought they would increase.  

Across the country, one might think a drop in average farmland values would cause at least some grief for an ag realtor like Saskatchewan’s Tim Hammond.

But that’s not the case. In fact, it’s not even close.

At Biggar-based Hammond Realty, one of the country’s biggest farm real estate companies, Hammond and his eight sales agents have realized a flurry of buying activity since the price calming.

They’ve charted $150 million in sales this year, with a full quarter still to go. That beats the previous record of $140 million, and represents a significant increase over 2018, when sales reached $100 million.

“Buyers are entering the market now that sellers have stopped testing the waters with prices,” Hammond says. “Sellers are motivated and, as a result, buyers feel like they have more negotiating power than they did a couple of years ago when there was very little land for sale.

Back then, he says, his firm had 10 buyers for every farm. So, there wasn’t much negotiating going on.

“Now the number of buyers and sellers is more balanced, and they’re asking us to help broker a fair deal,” he says.

Land values sometimes reflect the mood of the agricultural community.  If it’s dour, then no one is likely to sell or buy land at anything but a discount. And while it seems like there may be some deals to be had, don’t expect a wholesale sell-off. Despite a gloomy horizon with trade with China and the USA being coloured by their respective leaders, there are still a lot of countries that would welcome the chance to take Canadian far products.

To encourage thoughtful and respectful conversations, first and last names will appear with each submission to The Observer's online community. Pseudonyms are not permitted. By submitting a comment, you accept that The Observer has the right to reproduce and publish that comment in whole or in part, in any manner The Observer chooses. Please note that The Observer does not endorse the opinions expressed in comments. Comments on this story are moderated according to our submission guidelines. Comments are welcome while open. We reserve the right to close comments at any time.

We're looking for opinions that count.

Yours. Join in the conversation, provide another viewpoint, change minds with your perspective.


Spending on transit, bike lanes unlikely to pay any dividends

There’s an “if you build it, they will come” mentality to both transit and so-called active transportation (walking, biking) schemes in Waterloo Region. That’s...

January doldrums ideal for pondering the end of the world

January already got you down? It might get worse before it gets better, at least if you subscribe to the pseudoscience – and...

Downed planes are collateral damage

One of the main causes of death for airline passengers in recent decades is being shot down by somebody’s military. Not the very...

Iran likely to play the long game

If the Iranians played the game the same way that Donald Trump does, then their revenge for the American assassination of Iran’s leading general,...

So what’s wrong with a $4 turkey?

Afriend of mine – let’s call her Tara, because that’s her name – visited relatives in Michigan over the Christmas holidays, and noticed the...

Major agricultural trends for 2020 taking root locally

Major agricultural trends being predicted this year for all of Canada are taking root here in the region. Although it’s months before crop producers...

Think of posterity and posteriors when tying flies

This week, I have been making an effort to tie at least one pike fly every day so that when the spring season...

The psychology of ice fishing

A lot of people think a person has to be crazy to go ice fishing. After all, what you are doing is deliberately...

That you have a phone number can be traced to the measles

Q.  How did an epidemic of measles lead to the introduction of phone numbers? A.  At one time, all phone calls...

Size not an issue, as moquitoes top list of deadliest predators

Q.  Which of the following is the deadliest predator of people on the planet?  A. sharks   B. lions and other big cats   C. human...
- Advertisement -