The value of farmland has risen steadily over the past 5 years and the race is on to gather up arable land – either to farm it or for development. Canadian farm prices rose on average 12% each year since 2008. In highly productive parts of Canada such as southern Ontario, farm prices have been shooting up 30% to 50% a year. Across the board, farm values are increasing far faster than house prices.
Several factors are driving increasing farm values:
-Interest rates are at record lows
-Better crop yields
-High prices for commodities such as soy beans, canola, and corn
-Growing demand for food in the Third World
Thanks to better crops and technology, farmers can now produce more and manage larger farms with less effort. When neighboring farms come up for sale, many farmers are snapping them up to create larger, more efficient and productive farms.
Other than the fact that farm values are increasing, there are several other reasons why buying farmland is a good investment. Farmland is a vital commodity and as the world gets more crowded the value of productive land will only increase. The amount of farmland in Canada is limited and more is being lost to development every year. What survives will become more valuable. A farm is a hard asset that will hold its value. As populations grow and productive farmland becomes scarcer around the world, Canadian farmland will only become more desirable and valuable.
So, does buying a farm mean that you have to put on overalls and work the land yourself? You could do that or you could buy a farm and rent it out to someone else and collect cash rent or a crop share. Most investors buy into a limited partnership or purchase land and have it professionally managed.
If you’re interested in the investment potential of Alberta farmland, contact Fred Mertz and his team at Farming Families in Calgary.
By Fred Mertz Join me on Google+