Lower crop prices and sinking margins in 2024 pushed Southwestern Ontario farmland growth into negative territory for the first time in 14 years, according to an annual survey of farmland in the region.
Ryan Parker, partner and agricultural appraiser at London-based Valco Consultants, says a 1.43 per cent drop in farmland prices across the region in 2024 is the first dip in value since the company started its annual study in 2010. Between 2010 and 2024, the price of farmland included in the report has increased at an average rate of 11.3 per cent per year. The average sale price in 2024 was $26,530 per acre.
Parker notes that a closer look at the numbers reveals some stark differences in land values across the southwestern portion of the province.
“There are certainly areas in counties like Elgin, Lambton, Kent, Essex and Bruce where obvious decreases in values occurred in 2024,” Parker writes in the report. In Essex County, land prices dropped by 6.7 per cent, Wellington declined by 2.3 per cent and Kent dipped 1.3 per cent compared to 2023. “These areas had some similar themes: less desirable soil, not enough sources of demand and too much land for sale all at one time.”
There were also areas that experienced that rapid increases in values including pockets of counties like Grey, Huron, Lambton and Middlesex, says Parker. Overall, Grey saw a 11.1 per cent rise and prices in Lambton increased by 5.3 per cent.
Looking ahead to 2025, Parker expects the average farmland value in Southwestern Ontario will continue to “hang around 0 percent.” He expects interest rates and tariffs to be key drivers for the market moving forward.
“Interest rates are likely to go lower this year with an economy that’s going to have to deal with tariffs. These lower rates, as always, will help to give fuel to the land market,” says Parker. “However, commodity prices could be in big trouble from tariffs and any faltering on that side of the ledger will put pressure on land values.
“Additionally, the potential negative impact on our livestock and poultry profitability due to tariffs is something that could also really slow demand in our core-livestock areas,” adds Parker.
Earlier this month, RealAgriculture’s Bernard Tobin and Parker spoke about the decline in southwestern Ontario land values. Watch the interview here.