Alberta no longer has the most valuable total farm real estate in Canada, numbers from Statistics Canada show.
The value of Canada’s total farm real estate — including farmland and buildings — grew to $652 billion in 2022, according to agriculture balance sheets from StatsCan published last month.
The figures show that in 2020, Alberta’s total farm real estate was valued at $146 billion, higher than any other province. Ontario was in second spot, at $141 billion.
By 2022, Alberta’s total farm real estate value had increased to $167 billion, compared to $201 billion for Ontario.
“If you look at Ontario, the demand for land, farmland around urban areas … has been really, really strong,” said J.P. Gervais, chief economist for Farm Credit Canada.
“I do think that it’s a trend since really 2020 beginning of the pandemic.”
Growing conditions are also a factor, Gervais said.
“In the Canadian Prairies, it’s been really difficult for growers, [with] major drought and poor yields,” he said. “Whereas in Ontario, the yields have been pretty good.”
Data from Farm Credit Canada indicates Alberta’s farmland is most expensive south of Calgary, with costs running up to $20,200 per acre in 2022.
In Ontario, farmland is most expensive in the southwestern part of the province, where values ranged up to about $39,000 per acre the same year.
Even though Alberta’s total farm real estate value is no longer the highest in Canada, Gervais said Albertans can be optimistic about the future of local agriculture.
“[Land values] reflect the positive side of the industry,” he said. “The demand for what we’re growing in Canada continues to expand.”
While Ontario has seen more dramatic increases, climbing land prices in Alberta are posing challenges for young Alberta farmers building their businesses, according to Gervais.
Businesses have emerged to help farmers with the growing costs of expansion.
Area One Farms partners with farmers, giving them more capital to invest and expand.
“I say build the farm you want to farm in 10 years, but build it now when the opportunity exists,” said company founder Joelle Faulkner.
Matt Hamill, co-owner of Red Shed Malting — which produces malt on a farm near Penhold and sells it to craft breweries around Alberta — says his business exists because of the high price of farmland.
“If you’re a first-generation farmer, the cost of land is so prohibitive,” Hamill said. “We didn’t know if we could acquire additional farmland to grow.”
Instead of expanding his family’s operation, Hamill shifted focus and began turning his grain harvest into malt for brewing.
“There’s 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.
Red Shed Malting sells to several Edmonton breweries, including Alley Kat Brewing and Polyrhythm Brewing.
Hamill said as his business expands, he’ll likely buy grains from neighbouring farmers before considering acquiring additional land.
Gervais, meanwhile, said higher interest rates should slow down the increases in the cost of farm real estate.
On Wednesday, the Bank of Canada raised its benchmark interest rate to five per cent in its latest bid to curb inflation.
Gervais does not expect prices to go down, however.
“The farmland market itself is going to remain very strong.”