Pace of growth in Saskatchewan farmland values slows: FCC

Farmland values continue to rise in Saskatchewan, but not as rapidly as in past years, according to Farm Credit Canada (FCC).

The increase comes despite uncertainty around commodity prices and global trade.

FCC said farmland values in the province rose 2.9 per cent in the first half of 2019 compared to 2018.

“There might be some minor market adjustments along the way, but the days of sharp increases in farmland values have been replaced by more modest growth,” J.P. Gervais, the FCC’s chief agricultural economist, said Tuesday in a release.

“Now we appear to be moving into a time of cautious buying, where producers are focusing more on improving productivity and building resilience in their operations.”

FCC said most farms continue to be in a good financial position and the overall debt-to-asset ratio remains lower than the 15-year average.

Gervais said this leaves producers room to expand operations.

“The balance sheet is still strong, but uncertainty in markets and the fact that farmland values have climbed rapidly in the past may be giving some producers reason to pause,” Gervais said.

“Others may have already expanded their operations and are now exploring other strategic investments.”

FCC said changes in commodity prices, uncertainty around global trade and challenging weather conditions may have taken some of the steam out of farmland values.

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Gervais said farmers can prepare for unpredictable circumstances by maintaining a risk management plan while remaining focused on the big picture.

“Demand for Canadian agricultural products is projected to remain strong at home and abroad in 2019-20, so there is a long-term positive future in agriculture,” he said.

Average farm values in Canada increased three per cent in the first six months of 2019 after rising 6.6 per cent in 2019, FCC said.

The agency said if the increase holds steady for the remainder of the year, it will be part of a five-year trend of softening growth in farmland values.