We have all heard the saying, “what goes up must come down,” but does that maybe not apply to land values? This week FCC released its newest version of the Farm Credit Canada Farmland Values Report and the results continue to verify the upward trend of land values. It is becoming ever more difficult to justify the purchase price of farm land in Canada based on the cash flow potential. Whether you are a corn, canola soybean or livestock producer, the ability to increase the size of your operation continues to provide challenges. Some economists like Dr. George Brinkman continue to be worried on the possibility of a land bubble in Canada which is similar to the recent real estate crash in the United States.
I talked to JP Gervais, Senior Agricultural Economist, Farm Credit Canada about the report and asked him the following questions:
- Which province gained the most in the past six months?
- Which province had the lowest gain in land values in the past six months?
- Which province has been the consistent winner over the past five years?
- With the rising rent values in Ontario, are you surprised that its number is not higher?
- Is FCC concerned about the ratio of land values to cash flows continuing to grow?
JP Gervais was the lead on the study and provides a very interesting perspective on some of the trends that are beginning to develop and why. I hope you enjoy our discussion.
If you cannot see the embedded video below click here.