On agriculture balance sheets, Alberta is second, after Ontario
Statistics Canada numbers show that Alberta no longer has the most valuable farmland in Canada as a whole.
Statistics Canada’s agriculture balance sheets from last month show that the value of all farm real estate in Canada, including farmland and buildings, grew to $652 billion in 2022.
The numbers show that in 2020, Alberta’s farmland was worth 146 billion dollars, which was more than any other province. At $141 billion, Ontario was in second place.
By 2022, the total value of farmland in Alberta was $167 billion, while it was $201 billion in Ontario.
“If you look at Ontario, the demand for land and farmland near cities has been very, very strong,” said J.P. Gervais, the chief economist for Farm Credit Canada.
“I do think it’s a trend since the pandemic started in 2020,” he said.
Gervais said that the conditions for growing are also a factor.
“Growers have had a hard time in the Canadian Prairies, where there has been a lot of drought and low crop yields,” he said. “On the other hand, the yields in Ontario have been pretty good.”
Farm Credit Canada says that the most expensive farmland in Alberta is south of Calgary, where it can cost up to $20,200 per acre in 2022.
In Ontario, farmland was worth as much as $39,000 per acre in the southwestern part of the province in the same year.
Even though Alberta’s total farm real estate value is no longer the highest in Canada, Gervais said that Albertans can be optimistic about the future of local agriculture.
“[Land values] show the good things about the business,” he said. “The number of people who want what we grow in Canada keeps growing.”
Gervais says that while Ontario has seen more dramatic increases, rising land prices in Alberta are making it hard for young farmers to start their own businesses.
There are now businesses that help farmers with the rising costs of growth.
Area One Farms works with farmers and helps them get more money so they can invest and grow.
“I say build the farm you want to run in 10 years, but do it now while you have the chance,” said Joelle Faulkner, the founder of the company.
Matt Hamill, co-owner of Red Shed Malting, which makes malt on a farm near Penhold and sells it to craft breweries in Alberta, says that his business exists because farmland is so expensive.
“The price of land is so high for a first-generation farmer,” Hamill said. “We weren’t sure if we could buy more farmland to grow on.”
Instead of growing his family’s business, Hamill changed his focus and started making malt from the grain his family grew.
“There are a lot of young farmers, the next generation taking over the farm, who are looking for more creative ways to make small-scale farming more sustainable,” he said.
Some Edmonton breweries, like Alley Kat Brewing and Polyrhythm Brewing, buy from Red Shed Malting.
Hamill said that as his business grows, he will probably buy grains from nearby farmers before he thinks about buying more land.
Gervais, on the other hand, said that higher interest rates should slow down the price increases of farm land.
In its latest effort to stop inflation, the Bank of Canada raised its benchmark interest rate to 5% on Wednesday.
But Gervais doesn’t think prices will go down.
“The market for farmland will stay very strong.”