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Rising borrowing costs, trade disputes and falling crop prices have conspired to slow the ascent of Canadian farmland values.

The average increase in agricultural real estate was 6.6 per cent in 2018 after a rise of 8.4 per cent in 2017, according to Farm Credit Canada, the country’s biggest farm lender.

J.P. Gervais, chief agricultural economist for the Crown corporation, said the Bank of Canada’s lending rate increases and lower prices for canola, soybeans and other major field crops amid global trade tensions have dampened farmers’ incomes and slowed the rise in land prices.

For 2019, Mr. Gervais predicts the trade disputes – the China-U.S. agriculture tariff dispute, China’s ban on most Canadian canola and India’s restrictions on Canada’s lentils and other pulse crops – will erode farm incomes and cut in half the rise of farmland value to about 3 per cent.

Soybeans and canola prices are down by about 15 per cent in the past 12 months. Wheat has fallen by 11 per cent and corn is down by 16 per cent. A weaker Canadian dollar aids the export-focused growers, but cannot entirely shield them from the price declines. Growers are responding by slashing the amount of acreage they seed with canola and soybeans by 6 per cent and 11 per cent, respectively, a recent Statistics Canada survey shows.

“In the prairies, canola can represent as much as 45 per cent of crop receipts, so this is obviously a big deal,” Mr. Gervais said on a call with reporters to discuss the annual release of the land value report, which analyses sales and benchmark properties in 51 regions of the country.

The lower crop prices come as costs for everything from fuel to fertilizer and machinery are rising. Statscan’s index of farm input costs is up by 20 per cent since 2011, outpacing farmers’ 17-per-cent rise in cash receipts during the same period.

Mr. Gervais said much of the rise in farmland values was driven by sharp increases in prices for lower-end acreage compared with the more productive, expensive fields.

Overall, a tight supply of highly production farmland and the historically low borrowing costs cushioned the slowdown in overall land price rises, Mr. Gervais said, noting the number of land sales decreased in 2018.

Across the country, farmland in British Columbia, Alberta, Saskatchewan and Quebec exceeded the national average rise in prices, while Nova Scotia posted a decline of 4.9 per cent.

Crop producers and dairy farmers drove up prices in Quebec’s busy agricultural real-estate market by 8.3 per cent, leading the country. Quebec farmland has risen in value every year since 1986, although growth has flattened out in the past few years. The FCC said bargain hunters in the eastern reaches of Quebec, including Gaspésie and Chaudière-Appalaches, sent prices up by double digits.

The Montérégie near Montreal is worth the most – $16,000 for one acre. B.C. land prices rose by 6.7 per cent, led by a 21.7-per-cent increase on Vancouver Island, the highest in Canada.

The fruit-growing Okanagan region boasts the country’s most valuable farmland, at almost $100,000 an acre. Price increases in Alberta were stable, as a dry start to the 2018 growing season and early snow dampened demand for land among smaller- and medium-sized growers.

Large producers and demand for irrigated land helped boost prices by 7.4 per cent. The southern part of Alberta saw prices rise by almost 13 per cent to an average of $6,200 an acre. Saskatchewan’s farmland rose by an average of 7.4 per cent after a 10-per-cent climb in 2017.

Weather had a big impact on crop yields and prices, the FCC said, as dry, hot weather and smoke from the British Columbia forest fires affected growing and harvesting conditions, the FCC said. Fields in the west-central part of the province are the most valuable, worth an average of $1,985 an acre.

Manitoba growers saw their farmland values rise by 3.7 per cent last year, as a wet start to the season was followed by a drought that reduced crop yields for soybeans, hay and feed corn. The Central Plains-Pembina region is Manitoba’s most valuable land, at an average $5,000 an acre.

Farmland in the tight Ontario market rose by 3.6 per cent, driven by supply-managed growers, cash-crop producers and investors. The FCC noted demand for land from dairy farmers softened, perhaps due to milk market share lost in free-trade deals. Ontario’s southwestern farm belt is the province’s most valuable, worth an average $17,500 an acre.