Alberta farmland values likely to be unaffected by COVID-19

FCC farmland report doesn’t account for the pandemic, but impact on land values should be ‘minimal’

Alberta’s farmland values have been rising at a slower pace for nearly a decade, and the pandemic isn’t likely to change that.

“I would expect that impacts are going to be minimal,” said J.P. Gervais, chief agricultural economist for Farm Credit Canada (FCC). “We still have a very limited supply of available land for sale. That was the case in 2019. It was the case in previous years. I would expect it to be the case in 2020.”

Related Articles

FCC found Alberta land values increased 3.3 per cent last year — less than half of the 7.4 per cent gain in 2018.

Central Alberta saw the largest change, with a 5.3 per cent increase last year and an average value per acre of $4,327. But the Peace Region only saw a 1.1 per cent increase (averaging $2,141) while the Edmonton region saw a 1.5 per cent gain (averaging $3,423 per acre). Southern Alberta prices rose 3.9 per cent with average values of $6,399 per acre.

Gervais expects to see a similar pattern this year, with land prices going up, but at a slower pace.

“Land is getting more expensive relative to farm income,” he said. “No matter where you live, the price of land relative to expected revenue on a per acre basis is significantly higher now compared to what the average over the last 50 years has been.”

And as the pandemic carries on, cash-flow needs (coupled with the cost and limited supply of land) will likely prevent most producers from making significant land purchases this year. It’s too risky in a year already mired in uncertainty, he said.

“One of the things we have to account for in this crisis is where we’re coming from,” said Gervais. “We had significant production challenges coast-to-coast in 2019. Margins were tighter, and with margins being tighter, we’ve eroded working capital a little bit.

“There’s lots of uncertainty. I expect more caution from sellers and buyers.”

About the author

Reporter

Jennifer Blair

Jennifer Blair is a Red Deer-based reporter with a post-secondary education in professional writing and nearly 10 years of experience in corporate communications, policy development, and journalism. She's spent half of her career telling stories about an industry she loves for an audience she admires--the farmers who work every day to build a better agriculture industry in Alberta.

Comments

explore

Stories from our other publications