While the rate of increase appears to be slowing, average farmland values in Alberta continue to rise.
“Farmland values rose rapidly in the 1970s but were met with a substantial decline in the 1980s,” says Aaron Lawson, program assistant, Alberta Agriculture and Forestry (AF). “For the most part, prices recovered by the mid-90s, and farmland as an asset class has performed well ever since. Average farmland values across the province in 2016 were over $2,500 per acre. It’s been a strong run when you consider that the last major peak in 1982, prices topped-out around $470 per acre.”
According to Farm Credit Canada, the national rate of growth in farmland values in 2016 was 7.9 per cent. P.E.I. had the highest rate of growth followed by Alberta at 9.5 per cent.
“The higher valued land is generally along the Edmonton to Calgary corridor and into Southern Alberta,” says Lawson. “Counties such as Taber and Lethbridge held the highest average farmland values in 2016, reaching over $5,800 per acre. One of the main reasons for this is that these areas are mostly in the black soil zone. More productive soil can be higher valued. There are other spatial factors that influence the value of farmland as well, such as proximity to city centers and main thoroughfares as well as access to irrigation.”
Lawson says that market factors have a major impact farm on farmland values.
“We sometimes overlook the most obvious things. Simple supply and demand plays a large role in determining the price of an item in the marketplace. There’s only so much land in Alberta and the supply of farmland available for sale each year is limited, as indicated by our data on number of acres transferred. Less supply often means more upward pressure on prices.
“Inflation is another reason for the drastic increases in farmland values. It’s important to look at prices in inflation adjusted terms in order to gain perspective on this.”
The per acre revenue generating potential is also an important driver of farmland values. “The decision to purchase land is often a strategic one. Producers may be expecting stronger commodity prices in the future. On the other hand, they might be trying to scale their land-base to their equipment, or purchase land close to their existing holdings where they might be able to farm at a lower cost.
“Interest rates have also had an impact on farmland values. Interest rates have been generally declining since the 1980s making land purchases more attractive and potentially more feasible for producers.”
For more information on farmland values in Alberta, go to AF’s website: https://www.agric.gov.ab.ca/app21/infopage?cat1=Statistics&cat2=Real%20Estate%20Values
Are you a producer or processor thinking about entering a new market? Are you facing challenges meeting your customer or regulatory requirements?
Alberta Agriculture and Forestry (AF) has a new online resource available called Meeting Customer Requirements that guides producers and processors through the necessary steps to consistently meet market standards, customer and regulatory requirements.
“Meeting Customer Requirements consists of four modules that each take between 15 and 30 minutes to complete,” says Kellie Jackson, development officer, AF. “The modules can be done individually or sequentially. Meeting Customer Requirements is free, easy to use and can be accessed online by computer or tablet.”
The new tool helps producers and processors to: evaluate whether their business is able to meet new requirements, take the necessary steps to address any gaps to enable them to meet these requirements, check and maintain their system through an internal audit and demonstrate that they are meeting requirements through an external audit.
Meeting Customer Requirements is available on AF’s website. For more information, e-mail email@example.com or phone 403-948-8538.