Ontario Agriculture

The network for agriculture in Ontario, Canada

FCC: Where are Farmland Values Heading?

Agricultural economists are said to seldom agree on things. The outlook for farmland values provides an excellent case in point.

FCC released its annual Farmland Values Report. The national average farmland value increased 22%, the highest increase FCC has ever reported. Large profit margins for crop production and continued low interest rates have driven the recent surge, mostly observed in the first half of last year.

As we’ve noted before, the margins for the crop sector are expected to tighten. But there’s no consensus on what the future entails. Opinions diverge broadly, as outlined in these two separate outlooks on farmland markets.

Re/Max report  states that despite a moderation of prices in the short-term, the positive long-term outlook for Canadian agriculture will sustain a “healthy” demand for farmland.

Professors Baker, Boehlje & Langemeier from Purdue University (Indiana) conducted a study which urges more caution when it comes to farmland valuation.

“Even though our data confirms the conventional wisdom that farmland has high returns, low risk, and is a good inflation hedge, the current [price /10-year average rental rate] ratio suggests this is not a good time to buy. Those purchasing farmland today should not ignore the prospects of “buyer’s remorse”.

Although crop prices have rebounded from their recent lows, the drivers of this recovery may be short term; such as being a function of the situation in Ukraine. As 2014 progresses, I’d urge crop producers to be cautious about using recent returns to project future cash flow.

What are you seeing in your area?

 

James Bryan, Agricultural Economist, Farm Credit Canada

Views: 438

Comment

You need to be a member of Ontario Agriculture to add comments!

Join Ontario Agriculture

Agriculture Headlines from Farms.com Canada East News - click on title for full story

CWSHIN Reports Exceptionally Quiet First Quarter for Swine Disease

The Manager of the Canada West Swine Health Intelligence Network reports the first quarter of 2021 was one of the quietest quarters ever in terms of infections in swine herds. The Canada West Swine Health Intelligence Network has released its report on Swine Health Surveillance for the 1st Quarter 2021, January to March.

Expanding Access to Broadband Connectivity in Wellington County

More than 280 homes and businesses of Wellington County are one step closer to fast, reliable internet access with construction now underway for expanded broadband infrastructure in the community.

Expanding Access to Broadband in Essex County

Over 540 homes and businesses in Essex County are one step closer to fast, reliable internet access with the beginning of construction of broadband infrastructure in the community.

Twenty-four innovators advance to Food Waste Reduction Challenge semi-finals

The Minister of Agriculture and Agri-Food, the Honourable Marie-Claude Bibeau, announced the 24 semi-finalists for Streams A and B of the $20-million Food Waste Reduction Challenge, an initiative under the Food Policy for Canada.

Husqvarna introduces 220iL battery trimmer/edger and 230iB battery leaf blower

Husqvarna, one of the world’s leading producers of innovative forest, park and outdoor power equipment products, is adding the 220iL battery trimmer/edger and 230iB battery leaf blower to its Battery Handheld 200 Series.

© 2021   Created by Darren Marsland.   Powered by

Badges  |  Report an Issue  |  Terms of Service