Farm Credit Canada (FCC) says Saskatchewan producers should prepare for a possible easing of farmland values. The price of farmland went up again in 2015 but not as in previous years, according to a new report.
In Saskatchewan, the average value increased 9.4 per cent in 2015.
Values have continued to rise since 2002 but nearly half of the province recorded either little or no increases in farmland values last year.
While Saskatchewan has recorded significant increases over the last four years, FCC says the average valuation of farmland appears “fair” based on the current strength of crop receipts.
READ MORE: Average farmland prices up 10.1% in 2015: Farm Credit Canada report
Nationally, average farmland values showed a 10.1 per cent increase in 2015. This is the second consecutive year Canadian farmland values have slowed down.
FCC’s chief agricultural economist, J.P. Gervais, said profit margins and demand for agriculture commodities remain strong, mostly due to the low value of the Canadian dollar.
“We’re now seeing lower commodity prices offset by low interest rates and a weak dollar. The weak loonie not only makes our exports more competitive, but helps producers receive a better price for their commodities that are mainly priced in U.S. dollars,” Gervais said.
The farmland values report showed that gains slowed in six provinces last year. Increases range from a low of 4.6 per cent in New Brunswick to a high of 12.4 per cent in Manitoba.
Corinna Mitchell-Beaudin, FCC executive vice-president and chief risk officer, recommends producers ensure they account for a possible “softening” of farmland values.
“Despite a recent strong performance in the agriculture sector, agriculture will always be cyclical so producers should be prepared for the ups and downs along the way,” Mitchell-Beaudin said.