Alberta no longer has the most valuable total farm holdings in Canada, Statistics Canada figures show.
The value of Canada’s total agricultural real estate, including farmland and buildings, grew to $652 billion in 2022, according to StatsCan Farm Balances posted last month.
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 place, with $141 billion.
By 2022, Alberta’s total farm real estate value had risen to $167 billion, compared to $201 billion for Ontario.
“If you look at Ontario, the demand for land, farmland around urban areas…has been very, very strong,” said JP Gervais, chief economist at Farm Credit Canada.
“I think it’s a trend since the beginning of the pandemic in 2020.”
Growing conditions are also a factor, Gervais said.
“On the Canadian prairies it’s been very difficult for growers, [with] a big drought and low yields,” he said. “Whereas in Ontario, the yields have been pretty good.”
Data from Farm Credit Canada indicates that Alberta farmland is most expensive south of Calgary, with costs rising 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 around $39,000 per acre the same year.
Although 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] they reflect the positive side of the industry,” he said. “The demand for what we are growing in Canada continues to expand.”
While Ontario has seen more dramatic increases, rising land prices in Alberta pose challenges for young Alberta farmers building their businesses, according to Gervais.
Businesses have sprung up to help farmers with the rising 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 grow in 10 years, but build it now when the opportunity exists,” company founder Joelle Faulkner said.
Matt Hamill, co-owner of Red Shed Malting, which produces malt on a farm near Penhold and sells it to craft breweries in 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 on.”
Rather than expand his family’s operation, Hamill shifted focus and began converting his grain crop into malt for beer.
“There are a lot of young farmers, the next generation to take 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 that as his business expands, he will likely purchase grain from neighboring farmers before considering acquiring additional land.
Meanwhile, Gervais said higher interest rates should curb increases in the cost of farm real estate.
On Wednesday, the Bank of Canada raised its benchmark interest rate to 5 percent in its latest attempt to curb inflation.
However, Gervais does not expect prices to drop.
“The farmland market itself will continue to be very strong.”