Price of farmland rises, but not as much as previous years

The price of farmland in Canada has reached new heights.

“For 2023, the average increase across the country was 11.5 per cent, so quite a bit of an increase,” explained Farm Credit Canada’s Chief Economist, J.P. Gervais.

In Ontario, farmland prices increased 10.5 per cent, down from the previous three years, which saw yearly increases at or over 20 per cent.

In our region, an acre of farmland now sells for $19,200 per acre in midwestern Ontario, up 8.5 per cent from 2022. In southwestern Ontario, it’s $23,100 to buy an acre of farmland, up 13.3 per cent.

Despite high interest rates, and some middling commodity prices, farmland continues to be very valuable.

“Supply’s tight. It’s not just that we’re not making any more farmland, it’s that there’s not a whole lot available for sale,” said Gervais.

Farmland is seen for sale near Belgrave, Ont. on March 18, 2024. (Scott Miller/CTV News London)

The steady increase in the cost of farmland is great for farmers that own it, but not so great for young farmers trying to get into the industry.

To buy 100 acres of farmland in southwestern Ontario, a small farm by today’s standards, it would cost $2.3 million just for the land. That does not include the house, barn, or buildings — just the dirt.

“I know you would need some help to get into the farming, because it is an expensive industry to get into because you need a lot of base money to get going. It’s a difficult start,” said Bruce County Federation of Agriculture President, Chris Cossitt.

“I don’t think farmland will see any declines. But the bottom line is that we are at a record high when it comes to affordability. Land is the least affordable, it has ever been for a farming operation,” said Gervais.

Gervais expects high interest rates and lower commodity prices to keep the increase in the cost of farmland at or below 2023’s rate of 11.5 per cent.