NEWS
THE WESTERN PRODUCER | WWW.PRODUCER.COM | JANUARY 26, 2012
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LAND PRICES | FARM DEBT
Soaring Ontario farmland prices worry appraiser Price per acre almost doubles | A rise in interest rates and drop in commodity prices could put land buyers in the red BY JEFFREY CARTER ONTARIO FARMER
DRESDEN, Ont. — Ontario farmland values have reached record levels, more than $12,000 per acre in many instances, and while that’s good news for sellers there are concerns. Mark Wales, president of the Ontario Federation of Agriculture, said there’s already a considerable amount of debt among the province’s farmers. He remembers, all too well, the farm crisis of the 1980s. “What if prices come down for our
commodities and what if interest rates go up? Farmers need to do some forward-looking, cash-flow analysis.” Ryan Parker, an agricultural land appraiser with Valco Consultants Inc. of London, Ont., said interest rates are not expected to increase appreciably until 2013 or 2014. Still, if the prime rate were to increase to just four percent, farmers could expect to pay six to seven percent for their money, he said. Parker is the author of a study that looked at nine counties in southwestern Ontario, an area comprising
BETWEEN 2010 AND 2011, PRICES IN TWO AREAS ROSE
45 percent some of the most productive agricultural real estate in Canada. In two locations, North Lambton and North Kent, the median purchase price in 2011 increased by about 45 percent over the 2010 level. North Lambton prices in 2011
ranged from less than $5,000 to more than $10,000. In North Kent, they ranged from $5,000 to more than $11,000. The study is intended as a measure of bare agricultural land prices. Nontillable acres were pulled from the data. Properties with high value homes and/or significant agricultural facilities were excluded. Some of the highest prices are being paid in Oxford County, especially in an area north of Woodstock. There are highly productive loam soils in the area and Parker said the dairy industry is having an influence.
Dairy farmers need a sufficient land base to meet the rules for spreading manure and since they’re unable to sink dollars into more quota, some are buying land. The top price paid for bare ground in Oxford over the past two years was more than $14,000 per acre. Parker credited low interest rates as prime driver behind the higher land prices, along with higher commodity prices and greater profitability over the past couple years. Looking forward, his company expects to see less land for sale, which could send prices up further. access=subscriber section=news,none,none
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