regions showed an annual change of less than one per cent. Only the North region in New Brunswick recorded a decline (-15.6 per cent).

I will use Manitoba’s results here, because it serves as an example of the regional variation in the growth of values – the key feature of the market for land found in every province. Manitoba’s Central Plains-Pembina Valley was one of the regions reporting no change in the average value of farmland in 2017. Unlike the previous year, when values saw record growth across the province, the region’s more valuable land seldom changed hands in 2017. That wasn’t the case with the Valley’s more affordable land, however. In 2017, the region’s lower-priced land was in considerable demand. But while there were more sales of that farmland, the prices at which it sold had little effect on the average value.

By way of contrast, values in the Eastman region increased 7.3 per cent. That growth was driven by expansion of livestock operations. This shift combined with expansion from Winnipeg to limit the land available for agriculture in the area.

3. Timing is everything. Most provinces, including Ontario and Saskatchewan, recorded a faster pace of increase in the first six months of the year. Things slowed down in the latter half of 2017 within each province, however.

The Bank of Canada’s two interest rate increases (in July and September) and the higher borrowing costs they produced, muted the increase in farmland values during that period. Additionally, periods of hot-dry conditions impacted yields across southern and central Saskatchewan. That resulted in a hit to revenues in the 2017-18 marketing year, a decline that tends to show up in slowing growth in farmland values. But with most land sales occurring in the first half of the year, any impact that the dry weather may have had on land prices is yet to be seen. Two factors to consider: • Farm income supports farmland


• Farm income and land prices go hand-in-hand.

With farmland values likely to continue to climb in 2018, we expect the year will also bring more volatile

commodity prices and slightly higher interest rates. I believe both the recent increases in borrowing costs, and any further increases in rates, will cool the farmland market in 2018. Now is the right time for producers to adjust business plans to reflect those pressures and assess their overall financial positions. Increasing productivity will be key in managing the changed economic landscape. For the full story including the report, interactive map, webinar and big picture analysis, check out the 2017 farmland values page at

— J.P. Gervais is the vice-president and chief agricultural Economist at Farm Credit Canada. Prior to joining FCC in 2010, he was a professor of agricultural economics at North Carolina State University and Quebec City’s Laval University. He also held the Canada Research Chair in Agri- Industries and International Trade at Laval. He is past-president of the Canadian Agricultural Economics Society. He obtained his Ph.D. in economics from Iowa State University in 1999.

16 British Columbia Berry Grower • Summer 2018

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