Brenda O’Farrell
The Advocate
The value of agricultural land in Canada continued its upward trend again last year, but that rate of increase is showing signs of slowing.
The value of farmland in Quebec jumped by an average of 7.7 per cent in 2024, less than the national average of 9.3 per cent and below the double-digit increases seen in the province in the three previous years, according to the latest figures compiled by Farm Credit Canada.
The rate of increase in Quebec was the fourth highest in the country, behind Saskatchewan, where prices increased by 13.1 per cent; British Columbia, which saw values jump 11.3 per cent; and New Brunswick, where the increase was 9 per cent.
Overall, the upward trend in farmland values across the country in 2024 continued to set new highs, but the national rate of increase seen in 2024 dipped below 2023 levels, when land values jumped by 11.5 per cent. In 2022, the across-Canada values increased by 12.8 per cent.
“The increase in Canadian farmland values in 2024 reflects an enduring strength in demand for farmland amid some pressures on commodity prices,” said J.P. Gervais, the FCC’s chief economist. “
Lower borrowing costs also helped drive the increase, Gervais added.
In Quebec, farmland values have seen consistent year-over-year increases for the last 39 years, with the most pronounced hikes recorded from 2011 to 2015. Last year’s 7.7-per-cent hike comes following a 13.3-per-cent hike in 2023, an 11-per-cent jump in 2022, a 10-per-cent increase in 2021 and a 7.3-per-cent improvement in 2020.
Quebec outpaced Ontario
In Ontario, farmland prices only saw a 3.1-per-cent hike last year, but the overall average dollar figure per acre in Ontario remained higher compared with Quebec. The average price of an acre of farmland in Ontario ranged from a low of $4,900 to a high of $33,700, with an average price of $20,087. In Quebec, the average price of an acre of farmland ranged from $1,700 to a high of $22,800, with the average pegged at $17,720.
Looking across the province, the Laurentides-Lanaudière region, north of Montreal, reported the highest rate of increase in farmland values, with selling prices recorded last year seeing a 14.8-per-cent hike.
According to the FCC’s report, the highest increases in that part of the province were in the central and eastern sectors of the region.
“The area is known for its diverse buyers (dairy, poultry, grain, potato and field vegetable producers),” the report states. “Therefore, when a particular sector experiences difficulties, this region is less likely to feel the effects on its land values.”
The Bas-Saint-Laurent – Gaspésie region saw the second-largest spike in farmland prices last year, with values increasing by 14.1 per cent. It is important to note, however, that despite the percentage jump, this region has some of the least expensive land in the province.
The demand in this region was driven by demand from supply-managed producers, according to the report.
In the Montérégie region, where the highest prices for farmland in the province continue to be recorded, the value of land jumped 3.2 per cent last year, with the average price hitting $22,800 per acre. The average price is $700 an acre more than in 2023, according to transaction data compiled by FCC. Sales prices last year ranged from $14,400 to $30,300 per acre in the region.
The tariff threat
“Overall, the increase in farmland values is a testament to the strong outlook for the demand of agricultural commodities and the high-quality food produced in Canada,” Gervais said.
But U.S. tariffs could have an impact, he added in a briefing with reporters last month.
In the short term, he said, “we are staring at even lower commodity prices.” But in the long term, “the world needs more of what we grow.”
But Gervais cautioned, the longer the tariff disruptions last, the larger the impacts will be on farmers’ bottom lines.
“Uncertainty – that’s a big deal,” Gervais said. “It applies to ag as it applies to the overall economy.”
This, in turn, will create an impediment to the willingness to invest in land.
On the national level
Although all provinces saw jumps in the prices of farmland in 2024, only three reported a higher growth rate compared with 2023 – British Columbia, Alberta and New Brunswick. There were an insufficient number of reported sales in Newfoundland and Labrador, and the northern territories to assess the changes in farmland values in those parts of the country.
More favourable weather conditions in the prairies last year was one factor cited in bolstering demand for land out west, according to the FCC.
The FCC’s latest findings are based on prices of land sold between Jan. 1 and Dec. 31, 2024.
But overall, the question of farmland affordability continues to hang over the sector. While the rate of increase for prices of farmland is showing signs of slowing, the affordability of land relative to farm incomes continues to deteriorate, the FCC claims.
“The affordability index is not trending in the right direction,” Gervais said, pointing out that Canadian farmers are facing the lowest level of affordability in the last 40 years.
This reality, he said, creates growing challenges for those producers looking to expand their land base, as well as being an impediment to young producers looking to establish an operation.