Farmland values in Canada rose by an average of 5.5 per cent in the first half of 2024, despite challenges like elevated interest rates and declining farm revenues, according to Farm Credit Canada's (FCC) mid-year Farmland Values update.
Ontario's increase was smaller, at 2.1 per cent, with the highest growth seen in Central West Ontario. The upward trend in farmland values is attributed to limited land availability and resilient farm cash receipts. However, lower commodity prices and high input costs are constraining growth.
In Ontario, demand remains high for premium farmland, particularly in regions where soil quality supports crop productivity. While some areas have seen strong gains, regions like Midwestern Ontario (Huron, Perth, Bruce, Grey, and Wellington counties) have shown little to no growth, reflecting the uneven nature of the market. The combination of limited available land and high interest rates continues to shape the market, though expectations of further rate cuts may stimulate future investment in land purchases.
Interest rates remain a crucial factor influencing farmland values. The Bank of Canada's recent cuts, along with expectations for further reductions in late 2024 and into 2025, could ease borrowing costs, potentially sparking renewed demand for land. However, lower farm revenues caused by falling commodity prices continue to pose a challenge for Ontario farmers looking to expand.
FCC's annual 2024 report is expected to be released in March 2025.