The price of Canadian farmland saw an unexpected increase in 2022 — with Alberta seeing its largest rise in seven years — according to a new report by Farm Credit Canada..While Alberta’s 10% rise on the previous year was lower than the national average [12.8%], higher revenues from agriculture subsequently increased demand for farmland across the province.. Farm .“Challenging economic conditions” were expected to slow demand in 2022, according to FCC Chief Economist J.P. Gervais; however, receipts of grains, oilseeds, and pulses in Canada increased 18.3% in 2022, leading to heightened demand..The data reveals an increase in the value of Alberta farmland not seen since 2015, when the price per acre rose by 11.6%. That echoes trends nationwide, with Canada seeing its biggest increase since 14.3% in 2014..Within Alberta, the Peace region saw a 13.5% increase with land valued at $1,500-$4,300 per acre..“Higher farm revenues are driving the demand for farmland, but higher borrowing costs and increased input prices are expected to lead to declines in the number of sales in 2023,” according to Gervais..“It’s good practice to have and maintain a risk management plan that takes into account possible economic changes. When producers ensure their budgets have room to flex if commodity prices, yields or interest rates shift, they’re better off in the long run.”.However, rising prices pose a challenge for young producers or new entrants to the market..“Land is more expensive now relative to income than it’s ever been. The ability to service debt and overall equity in the operation are critical factors of success going forward,” Gervais added..“The good news is farmland value increases reflect a positive outlook for the demand of agriculture commodities and the quality food we produce in Canada.”. Farming .“Producers have a long track record of making strategic investments in land, even before agriculture and food was identified as one of six sectors with the highest potential for growth by the Advisory Council on Economic Growth in 2016.”.“These long-term investments in food production spurred growth and create a bright future for Canada’s agriculture and food industry.”
