Farm Credit Canada (FCC) annually reports on sales from across Canada and contrasts them to previous years. Canadian farmland has consistently increased in the past decade, including in Saskatchewan. Although some parts of the province reported only modest increases, each region saw a rise in value in 2021 compared to 2020.
The value of farmland can vary based on soil type, irrigation, and other environmental impacts. In some parts of Saskatchewan, sale prices have been greatly affected by natural disasters like drought, but that hasn’t stopped the values from climbing upwards.
The growth in Saskatchewan’s farmland value has only accelerated in the first half of 2022 as commodity prices increased on global supply concerns driven by the war in Ukraine. Up to June 30, Saskatchewan saw a value increase of 8.4 per cent, compared to a national average gain of 8.1 per cent.
Farmland Growth in Canada’s Breadbasket
Saskatchewan is home to over 46 per cent of Canada’s seeded cropland and provides an estimated $16.3 billion in agricultural food products as of 2020. Its farm producers are the world’s largest exporters of peas, lentils, durum, wheat, mustard seed, canola, flaxseed, and oats.
FCC speculates that a lack of supply due to various international issues, combined with low interest rates, has helped to increase farmland values by up to 14.7 per cent. Saskatchewan’s highest increase was back in 2013, when rates soared 28.5 per cent and have been dropping ever since. However, 2021 is the highest increase Saskatchewan has seen in four years.
Although they dropped until last year, the consistent increase in Saskatchewan farmland value has seen the average acre nearly triple in value since 2012. The strong demand has helped stabilize the economy.
A Breakdown of the Numbers
Saskatchewan farmland gained 7.4 per cent in 2021, compared with 5.4 per cent in 2020. Within the province, the price increases ranged from just 0.4 per cent in the southwest (including Moose Jaw) to a whopping 14.7 per cent in the southeast. Here’s a breakdown of the numbers from 2020 to 2021:
Prices in the southwest region gained 0.4 per cent, averaging $2,000 an acre with a range of $1,000 to $3,300, though there were small pockets of higher increases.
Prices in the southeast region gained 14.7 per cent, averaging $2,200 an acre, with a range of $1,100 to $3,200.
Prices in the west-central region gained 4.9 per cent, averaging $2,400 an acre, with a range of $1,300 to $4,700.
In the east-central region, prices increased 11.3 per cent, averaging $1,900 an acre, with a range of $1,000 to $3,200.
Prices in the northwest region gained seven per cent, averaging $2,400 an acre with a range of $1,000 to $3,500.
Prices in the northeast region gained 8.3 per cent, averaging $2,300 an acre, with a range of $1,000 to $3,300.
Growth in Saskatchewan’s Neighbouring Provinces
Alberta and Manitoba, combined with Saskatchewan, make up the vast majority of Canada’s farmland. Alberta is home to 27 per cent of the total farmland, while Manitoba hosts 13 per cent.
Alberta and Manitoba both saw below-average increases year-over-year. Manitoba’s farmland value increased by six per cent in the first half of 2022, while Alberta’s increase was 5.9 per cent. These were the weakest increases in the country, only slightly ahead of Nova Scotia and New Brunswick.
Although it only makes up about nine per cent of the total farmland in Canada, Ontario saw the highest average increase at 22.2 per cent. The remainder of the Canadian provinces accounts for the last five per cent of Canada’s farmland.
Economists speculate that Saskatchewan is headed into a period of optimism and growth. “Strong farm cash receipts, buoyed by robust commodity prices, have managed to quell some of the profitability challenges from higher interest rates and farm input costs,” said J.P. Gervas, chief economist with FCC. “Producers are still making strategic investments in their operations and buying farmland, which is in short supply and high demand. This healthy farmland market is a good indication there is confidence and optimism in the future of the industry among producers.”
After nearly a decade in which the annual change in farmland value throughout Saskatchewan consistently dropped, record low interest rates paired with higher grain and oilseed prices have resulted in the highest rate of increase in four years. This is good news for Canada’s wheat province since it could drive more Canadians to move to this underrated yet affordable part of the country and enable the province to innovate and add to its robust agricultural industry.