Focus on Farmland

Rise in Okanagan values lower than B.C. average

FCC report for 2016 shows a ‘cooling off’ acrossmost of Canada.

By Judie Steeves I

n the Okanagan Valley, farmland values increased in 2016 by 7.4 per cent, slightly lower than the 7.9 per cent average increase across Canada, and considerably lower than the B.C. average of 8.2 per cent last year, above the national average.

Okanagan farmland was of particular interest to outside buyers, although there was some expansion by existing farm owners as well, according to the latest Farm Credit Canada report on the country’s farmland values, which was released in April.

Smaller acreages and ‘lifestyle’ farms continued to command strong prices, partly influenced by the strong urban market.

The high values for city properties leaves property owners in urban areas with good returns on property sales and change in their pockets with which to move up to larger rural parcels or ‘lifestyle’ farms.

Farmland value increases in the South Coast region of B.C., which includes the Fraser Valley, were the highest in Canada for 2016, at an increase of 17.7 per cent. By contrast, Vancouver Island’s farmland values increased by just 4.4 per cent.

Overall, the FCC report showed a ‘cooling off’ in values across most of Canada, with the lowest increase on average across the country, since 2010. But, healthy farm incomes and the low Canadian dollar helped keep farmland value increases above average in much of B.C.

In the South Coast Region there were above-average sales during the first half of the year, but moderate commodity yields and prices later in the season tempered the market, stated the report. The FCC report speculated the increase was due to continued expansion by local producers, but urban pressures are also partly responsible.

12 British Columbia FRUIT GROWER • Summer 2017


Increased interest in rural property was deemed another reason for the increases.

During 2015, farmland values increased by an average of 6.5 per cent across B.C., compared to an overall increase across Canada of 10.1 per cent that year, while in 2014, the overall national increase was 14.3 per cent, compared to a low of 5.2 per cent in 2010 and a high of 22.1 per cent in 2013. The low Canadian dollar and low interest rates have helped in recent years to keep farmland values on the increase across the country.

However, FCC vice-president Paul Gervais advises farmers that healthy farm incomes are critical to sustaining

farmland values, supported by such factors as increased yields.

He warns it is important to identify and manage key risks such as volatile commodity prices, and keep an eye on factors such as a rise in interest rates and appreciation of the Canadian dollar. He notes that land is the most valuable asset most farmers own, so it’s important to maintain that value, yet higher land values are a sometimes- insurmountable obstacle to young people who are looking to get into the farming industry.

In the current year, he forecasts an even lower farmland value increase, averaged across the country, or an increase of just three or four per cent.

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