Farm Credit Canada's mid-year report shows cultivated farmland values rose by an average of 5.5 per cent nationally for the first half of 2024.
Over the 12 months from July 2023 to June 2024, there was a 9.6 per cent increase, representing a slowdown compared to the previous 12-month period (January to December 2023).
FCC's Vice President and Chief Economist J.P. Gervais says for the second consecutive year, Saskatchewan recorded the highest average six-month increases at 7.4 per cent, Alberta was at 4.6 per cent, and Manitoba 3.9 per cent.
He says several factors are playing a role as we start to see interest rates coming down.
"I don't think we've seen the end of the decline in terms of interest rates. We're going to see more interest rate cuts by the Bank of Canada for the rest of 2024, as well as going into 2025. So from that standpoint, I think that provides a little bit of relief when it comes to those businesses that are looking to buy and purchase land. The fact of the matter is as well that the supply of farmland being available is very tight."
Gervais says the perspective or the outlook for the Ag sector remains positive in terms of future strength and the demand of what we grow on Canadian farmland. So all that together I think results in in some of the numbers that we're reporting.
"The continued rise in farmland values highlights a positive and robust long-term outlook for the agriculture sector. As we move into the latter half of 2024, the trends in farm revenues and interest rates will be key indicators of where farmland values might head next."
Gervais noted that farm cash receipts are projected to decline overall in 2024 by 3.3 per cent as commodity prices show few signs of a quick rebound, possibly limiting farmers' willingness and capacity to assign higher valuations to farmland.