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: 434

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

Delivering High-Speed Internet in Dufferin-Caledon

Canada and Ontario are delivering on their commitment to create even more economic and educational opportunities in rural, remote and underserved areas of the province through an improved, modern broadband network in Southwestern Ontario.

Sollum Technologies Enters Into a Strategic Partnership With Allegro Acres for the installation of Its Smart Lighting Solution

Starting in November, Sollum Technologies' unique smart LED lighting solution will be implemented at Allegro Acres, a family-owned greenhouse pepper farm operating in Southwestern Ontario for over 20 years.

Chicken Farmers Sponsor Hunger Action Month

Chicken Farmers of Ontario (CFO) is supporting Hunger Action Month as a Leadership Sponsor of the Ontario campaign with Feed Ontario. This $5,000 sponsorship is in addition to the ongoing donations from chicken farmers of healthy, safe, locally-grown chicken to Ontario food banks, year round.

GGC disappointed by lack of federal attention for agriculture priorities

Following today’s Speech from the Throne, the Grain Growers of Canada (GGC) are disappointed that many of the pressing needs for Canada’s agriculture industry were left unaddressed by the federal government.

Trudeau Government Must Fight for Farmers like they have for Aluminum and Steel Industries

Atlantic Grains Council, Grain Farmers of Ontario, and Producteurs de grains du Québec have launched a joint campaign to raise awareness with the public of the devastating consequences for all Canadians because many Canadian grain farmers, literally, will — go out of business. They can no longer compete with U.S. farmers.

© 2020   Created by Darren Marsland.   Powered by

Badges  |  Report an Issue  |  Terms of Service