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Nova Scotia farmland values continue to increase

April 17 2015

FCC report

Published on April 15, 2015

Average farmland values in Nova Scotia continued to climb in 2014, according to the latest Farm Credit Canada (FCC) Farmland Values Report.

 

The report, released April 13, covers the period from Jan.1 to Dec. 31, 2014.

Nova Scotia was among four provinces that showed an increase from the previous year, climbing from an increase of 1.9 per cent increase in 2013 to 7% in 2014.

Prince Edward Island, New Brunswick and British Columbia continued to see single-digit increases, while the value of farmland in Newfoundland and Labrador remained unchanged from 2013.

Average farmland values in Canada showed a 14.3% increase last year, compared to a 22.1% increase in 2013. The rate of increase also slowed in many key agriculture regions, including Alberta, Manitoba, Ontario, Quebec and Saskatchewan.

 “While the increases are still significant in many parts of the country, they do suggest we are moving toward more moderate increases for farmland values,” said. The noted, “This is good news for producers since gradual change in the value of this key asset is always better for those entering or leaving the industry.”

FCC Chief Agricultural Economist J.P. Gervais has been predicting a “soft landing” for farmland values since crop prices began moving closer to the long-term average following abnormally high prices due to the 2012 U.S. drought.

While lower interest rates make it tempting to buy land, Gervais emphasized producers need to exercise caution. “Interest rates will eventually increase, even if this is not on the 2015 horizon,” he said. “Expanding world stocks of grains and oilseeds could bring prices down further, creating tighter margins.” Tighter profit margins may also affect the land rental market. Rental rates usually take a little time to adjust downward following lower grain and oilseed prices. Multi-year leases are also gaining in popularity.

 “Producers should be encouraged that a weak Canadian dollar, expanding trade agreements and growing world food demand are helping to enhance the demand side of the market for Canadian commodities, creating a positive long-term outlook for agriculture,” Gervais added.

 “Land is a valuable asset and there really isn’t a one-size-fits-all formula for determining when to buy or sell,” FCC Executive Vice-President and Chief Risk Officer Corinna Mitchell-Beaudin said. “Producers really need to take a close look at their operations and ensure they can manage through a number of scenarios when it comes to revenues and expenses.”

To view the report, visit: www.fcc.ca/FarmlandValues.

 

NOVA SCOTIA

Land prices continued to rise steadily in Nova Scotia last year as dairy, poultry and livestock producers appeared to compete for farmland. While the number of sales was low, the prices were noticeably higher even in locations less favourable for intensive agriculture, the FCC report said.

“In the Colchester region, dairy farmers sought nearby parcels for growing grain or forage. The region also saw interest in small acreages and part-time operations. Vegetable and dairy producers were quick to acquire good quality parcels if they became available.

“Farmland sold quickly in the Kentville area. Most demand was from the poultry industry, vegetable producers, fruit orchard owners, and other cash crop growers. Price increases over the past several years continued, although 2014 saw less activity than in the past two years.”

The report said, “Demand for land remained high in the Antigonish region. This is predominantly a dairy production area, with beef, blueberries, horses and mixed farming operations. High feed costs, along with the need for quality forage land, kept the demand high. Rebounding beef prices also improved returns, providing additional incentive for that industry.”

 

NEW BRUNSWICK

New Brunswick farmland values increased an average of 8% last year following an increase of 7.2% in 2013 and no increase in 2012. The FCC report said 2014 was the highest year-over-year increase in NB since 2009.

It said, “2014 was an active year, with numerous sales and a general increase in the value of farmland. Potato production continued to be the dominant regional farming activity, along with some dairy, beef and mixed operations.

“Farmland was particularly attractive to potato production for processing operations looking to obtain more land to improve their crop rotation schedule.”

The report said, “farmers in other sectors, including dairy, also showed some interest in purchasing land but appeared to have more difficulty matching the price level that could be justified by potato growers, Potato land was in demand because of its tendency to create better soil for growing forage corn.”

 

PRINCE EDWARD ISLAND

Farmland values in Prince Edward Island increased an average of 9.3% last year, the highest increase in the province since 1999. Values increased by 4.4% in 2013 and by 9% in 2012.

“Despite the closure of an important potato processing plant, demand for land remained strong in 2014,” the FCC report said.

“Many purchases included large sections of excellent quality potato land. Others occurred when owners chose to sell land they had previously been renting out; in these situations, competition tended to be very high.

“Prince County saw a high number of farmland sales. While most of the higher-priced activity was within the Summerside and West Prince areas, locations with less intensive production also saw strong sales.”

The report said, “Farmland purchases in the Charlottetown area continued on a steady trend throughout 2014 with land close to the city limits demanding high prices. Crop producers acquired bare land parcels, while some non-farmers bought smaller farm acreages.

“A few farmers bought land while relocating to PEI, possibly due to lower land prices relative to other locations in Canada.”

 

NEWFOUNDLAND & LABRADOR

Average farmland values in Newfoundland & Labrador remained unchanged in 2014— for the fourth consecutive year.

The FCC report said, “The province’s Department of Natural Resources continued its Land Consolidation Program. The program is designed to acquire land from non-farm landowners and retiring farmers and lease it to active farming operations to help maintain productive agricultural land. Transactions were limited in 2014 and none supported a change in land values.”

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