The value of agricultural land across Canada is generally holding up despite falling crop prices, regional flooding and a long winter that kept buyers at bay, a new report shows.
However, the study from real estate company Re/Max adds that price increases for most farmland are expected to slow this year, with the exception of Alberta, southwestern Ontario and parts of the Ottawa Valley.
In Alberta, bidding wars have helped drive up the price of farmland by as much as 20 per cent year over year to around $10,000 an acre in the southern part of the province. Even unproductive scrubland rose in value as city dwellers bought rural getaways.
"Western Canadian farmers and their families continue to display resilience, surefootedness and enduring optimism," said Elton Ash, regional vice-president at Re/Max of Western Canada. "Intense demand and short supply in Alberta has caused bidding wars like we see in Canada's hot housing markets."
The picture was not as bright in Saskatchewan and Manitoba, where flooding and a harsh winter hurt farm profits and kept per-acre values generally flat year over year. In Saskatchewan, prices increased from between $1,500 and $2,000 an acre in 2013 to between $1,800 and $2,200 in 2014. Manitoba saw its price range go from between $1,350 and $1,600 to $1,500 and $2,000.
The report said the most typical buyer of farmland anywhere was a farm family expanding their output by buying more land. Proximity to local processing facilities was also a big factor in purchases.
In Ontario, farmland north of the Greater Toronto Area slated for redevelopment has hit $54,000 an acre, double the value of producing land in the region. The southwest tip of the province, Chatham-Kent, saw prices increase by 40 per cent from 2013 to $25,000 an acre. The rise drove some families looking to expand their farms out of the region to find more affordable land, the report said.
In Ontario's Kitchener-Waterloo area, the bulk of the buyers were wealthy city folk looking to start a hobby farm. These farms ranged in size from 15 to 50 acres and typically cost just under $1-million, slightly lower year over year. Farmers in this area are also having to go further afield to find affordable land to expand their operations.
British Columbia's blueberry-growing region, the Fraser Valley outside Vancouver, is also drawing a lot of interest from buyers. In the wake of a good blueberry crop in 2014, prices for an acre of farmland rose modestly to as high of $63,000 an acre from $60,000 in 2013.
In Nova Scotia, a number of new vineyards help send up prices 25 per cent to as much as $10,000 an acre.