Amidst the sprawling landscapes of Saskatchewan lies Will Robbins, a 43-year-old farmer embarking on the challenging journey of taking over his family farm near Laura, Sask. His farm, spanning 445 hectares, is dedicated to growing organic wheat, oats, lentils, peas, and occasionally flax and mustard. However, what once seemed like a promising venture has been overshadowed by the astronomical rise in farmland prices.
- The Soaring Prices:
Back in 1996, land prices in west-central Saskatchewan averaged at $980 per hectare. Fast forward to last year, and the figure has skyrocketed to approximately $7,410 per hectare, marking a staggering increase. This exponential rise has left Robbins contemplating the feasibility of expanding his farm, considering the mounting risks such as climate instability.
Robbins expressed his concerns, acknowledging the challenges posed by escalating land prices. He emphasized the daunting prospect of accumulating significant debt to finance land, especially when its returns may not be realized for 15 to 20 years. While not the sole determining factor, the exorbitant land prices undeniably act as a deterrent to farm expansion. - Impact on Prairie Farmers:
The upward trend in farmland prices across the Prairies over the past two decades reached a peak in Saskatchewan in 2011, triggering continuous significant hikes. In 2023, prices surged by 15.7%, marking the highest increase in Canada for the year. The average price per hectare now ranges between $6,670 to $16,060 in Saskatchewan, with Manitoba and Alberta closely trailing or surpassing these figures.
This situation has particularly impacted younger farmers striving to expand their operations and compete with larger farms that continue to grow in size. Leigh Anderson, an economist at Farm Credit Canada, highlighted the challenge faced by young farmers who lack the assets necessary to acquire additional land. Established farms with a robust asset base can effortlessly expand by absorbing more land, further exacerbating the competition. -
Opportunities and Challenges:
The surge in land prices, attributed to strong crop revenues and limited supply, presents a double-edged scenario. While it hinders new entrants from gaining a foothold, older producers looking to retire stand to benefit from the increased land values. Bill Prybylski, a farmer in east-central Saskatchewan, shared his mixed feelings about the situation. Despite the obstacles it presents for expansion, the higher prices provide additional financial leverage to existing operations.
Speculations surrounding the influence of out-of-province investors in driving up land prices have also surfaced. Reports suggest that large farming corporations are acquiring land, consequently inflating its value. This trend, coupled with the influx of non-family operated institutional owners, has contributed to the rising price trend in recent years.
In conclusion, the mounting land prices in Saskatchewan have posed formidable challenges for both young and established farmers alike. While these prices present hurdles to expansion and sustainability, they also offer potential gains for retiring farmers. Initiatives such as encouraging retiring farmers to sell land to local individuals or implementing tax changes to support local acquisitions could potentially mitigate the impact of soaring land values. As farmers navigate this complex landscape, balancing stability with growth remains a crucial aspect of their operations. As Robbins aptly summed up, the prevailing high land prices may not directly translate to equivalent crop values, yet owning land offers a sense of security amidst uncertainty in the farming industry.
