OTTAWA, Canada, November 7, 2011 — Farm revenue and productivity are the major contributing factors to rising farmland prices in Canada, says a research report recently published by Bonnefield, a Canadian farmland investment management and property management company. The report titled Factors that Drive Canadian Farmland Values was first released at the Canadian Farmland & Agri-Business Investment Seminar held in Toronto on September 22, 2011.
The report’s authors, Tom Eisenhauer and Marcus Mitchell, reviewed 60 years of farmland value data for Canada and individual provinces and assessed the relative influence that factors such as farm revenue, farm productivity, agricultural commodity prices, farm profitability and interest rates have on farmland values. The report concluded that increasing farm revenue and improving farm productivity have been the major contributing factors to rising farmland prices in Canada. Other significant, although less important, factors have been commodity prices and the generally prevailing level of interest rates.
“Canadian farmland has had a remarkably steady appreciation over time, yet interestingly, commodity prices have been quite volatile. For many, this intuitively doesn’t make sense,” said Mr. Eisenhauer, the report’s co-author and President of Bonnefield Financial. “Our research shows that, in fact, farmland values are more closely correlated to total farm revenue and commodity prices are just one contributing factor in determining farm revenue”
The report also shows a remarkable consistency in the factors that have driven farmland prices in different provinces of Canada. In Saskatchewan, however, farmland prices have significantly lagged those in the rest of Canada, and the data suggest that a major contributing factor to this underperformance has been unintended impacts of the Province’s farmland ownership restrictions.
Factors that Drive Canadian Farmland Values is available free of charge on the Bonnefield website at www.bonnefield.com/resources