Farmland values in Ontario on the rise
Dec. 5, 2012 - The Municipal Property Assessment Corporation (MPAC) has analyzed farmer-to-farmer transactions in Ontario and seen a province-wide average increase of 46 per cent over the past four years.
According to the Market Snapshot, there was an increase in every region of the province and for all six classes of agricultural land, with the largest increase seen in the top three classes (which are primarily used for cash crops). While grazing land did see an increase, it was much less pronounced.
"The average price per acre of class 1 farmland in Ontario rose from $4,051 per acre in 2008 to $7,323 in 2012," said the report, while class 6 farmland only showed an increase from $421 to $1,008.
The farm values for the 1,700 evaluated farms of 20 acres or more over the past five years were established based on a number of criteria by MPAC, such as production capability of crops or livestock, soil type, residence, buildings, climate and location. The average increase was noted at 34 per cent, but if the homes (and the acre of land they sit on) are assessed as residential properties, the average increases to 46 per cent.
The increases are being driven by a number of factors, says the report. These include:
- Historically low interest rates.
- Increased prices for agricultural commodities driven by factors including: The use of corn for ethanol production in both the United States and Canada, the recent drought decreasing corn and other cash crop production; and increasing food consumption in rapidly developing countries.
- Large machinery, which allows farmers to increase productivity but requires large amounts of land to justify the high cost.
- The need for large livestock operations to acquire land to expand and meet nutrient management program requirements.
- An increasingly limited supply of farmland as more agricultural land in Ontario and other jurisdictions in North America is taken out of production for urban development.
For more information on MPAC and the farmland assessment survey, please visit www.mpac.ca.
For a copy of the Market Snapshot, click here.