Farmland Value Update – Slowing Growth

Farmland Update – Small Price Increase

Farm Credit Canada just released its annual Farmland Values Report which provides a yearly overview of provincial and national land values trends across the country. As usual, it is this time of the year that I adjust the value of my Saskatchewan farmland using the average change of this report and the inflation rate (CPI.)

Unfortunately farmland values in east-central and southeast Saskatchewan remained unchanged in 2016. This is where my plot of land is. The FCC report points to the oil and gas industry slowdown as the main reason for the lack of appreciation. However, other parts of Saskatchewan did see increases. 🙂

There was 0.00% increase in value to my farmland according to the report. The overall inflation rate in Canada was 1.43% in 2016. The average of these two numbers is 0.715%. Therefore I will be adding $3,000 to my farmland value from $433,000 to $436,000 in my April net worth update. 🙂

Ever since I started to invest in farmland, the FCC reported values is SK have always appreciated faster than CPI. This is the first year where the inflation rate has surpassed that of the annual FCC report.

Despite the stagnation in some parts of Saskatchewan, the overall appreciation in Canadian farmland was pretty good. Each province saw positive growth in aggregate, and the average increase across the country was 7.9% for 2016.

Luckily my farmland operation is profitable and I have a rental contract for the next 2 years so I am not too concerned that my farmland did not appreciate in 2016. I just hope it retains its value for the next 4 years, at which time I will probably sell it to free up capital for other, more liquid investments.

I bought my farmland in 2012. If I had to grow my own crops I would probably start with fruit farming. I think I would be berry good at that. 😀 But for now, I am happy just being a landlord.  My tenant always pays on time and the land’s value has gone up a lot so far.

But as we can see, the growth has been slowing since 2013. I believe the hay-day of farmland investing is behind us. Interest rates can’t go much lower than it already is. A weakening of the Canadian dollar and more foreign investments can spur a little more growth in the farmland market, but it’s not a guarantee.

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