Average Canadian farmland values continued their more than 30-year streak of increases last year, but Farm Credit Canada says the rate of growth is slowing and trade disruptions could further dent them.
The Crown corporation, which provides financing and other services to the agriculture industry, said in a report Tuesday that the average value of Canadian farmland rose last year by 9.3 per cent. In 2023 it saw an increase of 11.5 per cent, and in 2022 farmland appreciated by 12.8 per cent.
The last time farm values shrunk was in 1992.
“There’s a little bit of evidence that the increase in farmland values are slowing down, but it still remains a very large increase," said FCC chief economist J.P. Gervais.
He said the main reason for the change in pace is the revenue decline farmers are seeing.
“We faced in 2024 a major reset of commodity prices," he said, pointing to the COVID-19 pandemic and Russia's invasion of Ukraine as reasons for an earlier spike in commodities.
Lower prices for grains, oilseeds and pulses led to an 11.8 per cent drop in main field crop receipts in 2024.
Gervais said FCC had an optimistic outlook for farmer revenues at the beginning of 2025 but now is calling for another year of decline as the U.S. makes tariffs on imported goods a centrepiece of its economic policy.
“The demand long-term is still very strong. It doesn’t change the story that we have for Canadian agriculture, which is the world needs more of what we grow," he said.
In 2024, Saskatchewan led with the biggest increase in farmland values at 13.1 per cent, followed by British Columbia at 11.3 per cent. All other provinces had growth in the single digits, the report showed.
But trade disruptions — not only the tariff war the U.S. launched against Canada this month, but spats with other trading partners like China — are causing major challenges in the agriculture space and could weaken demand for farmland.
One is the inability to predict what's coming, given that farming comes with high capital costs and thin margins.
“Uncertainty, instability – those are big impediments to investment," said Gervais.
Declining interest rates might provide a bit of a cushion for those wanting to expand their farming operations, but revenues are in for a steep decline as key commodities get caught up in the tariff storm.
“The longer it lasts, the more impactful it would be," said Gervais.
"If it stops tomorrow, it’s going to be a blip.”
This report by The Canadian Press was first published March 18, 2025.
Lauren Krugel, The Canadian Press