Higher land costs translate to higher rents for farmers who lease their land, according to a recently released analysis of farmland rental rates from Farm Credit Canada.
The annual analysis, which plots cash rents against the value of farmland for each province, indicated that landowners were charging tenant farmers rent equivalent to 2.52% of the value of their land. This was virtually unchanged from 2.55% last year, indicating that lease rates were keeping in step with increases in land costs.
FCC reported in March that farmland values increased 11.5% last year.
Nova Scotia was alone in seeing rental rates outstrip growth in farmland values, with all other provinces either seeing rents rise in step or lag changes in land values.
“The three provinces that recorded the highest farmland value increases in 2023, Saskatchewan, Manitoba, and Quebec, also saw increases in rental rates, maintaining stability in rent-to-price ratios,” FCC notes.
BC, which saw land values fall 3.1% last year, driven by declines in the Fraser Valley, was absent from the analysis, however.
FCC says there simply wasn’t enough rental rate data from the province to analyze.
Secure tenure and high land costs are big issues for farmers in the province, so much so that Young Agrarians set up a land-matching program, now funded by the province, to foster lease arrangements between landowners and farmers.
Census of Agriculture data indicate that 771 of the 15,841 farms in the province were wholly dependent on leased land in 2021. Private landowners leased land to 3,092 farms, awhile government leased to 820 farms.
Government leases totalled 1.7 million acres, reflecting the importance of Crown land to the province’s farms and ranches.
This also complicates the picture of compensation, however.
Several payment arrangements exist. Some owners are content with the reduction in property taxes that comes from allowing their land to be farmed while others accept a share of production. Cash rates run from as little as $1 an acre up to a few hundred dollars.
Livestock oversight to change