The search for land

Farmland prices increase as land becomes scarce

By Jessica Sims

It’s getting harder to find farmland for sale in the eastern tip of Ontario, driving up prices.

Farmland in Ontario increased on average of 3.3 per cent in the last half of 2009, according to the most recent Farmland Values Report from Farm Credit Canada. In Renfrew County there was an increase of 7.4 per cent, in Prescott an increase of 6.7 per cent, and in Russell an increase of 4.9 per cent. The report said the demand for land was mainly fuelled by cash crop businesses, however large livestock operations, in pushing for expansion, also pushed up prices.

"There’s a lot of competition" for land, Tom Pasco, of Williamstown, said. He recently bought 125 acres he plans to use for crops close to his dairy farm. "You’re happy when you get this land but at the same time you’re really torn. I’ve got two close neighbours that I consider great friends and we bid against them and we got it."

"There’s not enough for sale," agreed St. Eugene dairy farmer George Heinzle. "In the last few years we don’t see any ‘For Sale’ signs."

St. Isidore crop farmer Marc Bercier purchased 700 acres three years ago for around $3000 an acre. Two months after he bought it, it had already risen 30 per cent over his purchase price. His brother, Jean, bought 50 acres near him last year for around $5,000 an acre. By this winter it was estimated at $6,000 an acre, Bercier said.

Yet rising prices have worried Bercier too, who wonders how it will affect his children’s chance to farm in his area. "My son will finish school and I’ll have my daughters coming on the farm, and I see less opportunity for young farmers."

Not only is it difficult for existing farmers to expand their farms, but anyone looking to buy land for the first time has a real challenge ahead of them, Alexandria real estate agent Bill Shields explained. Even parcels of land less than 100 acres are drying up.

"If you had somebody with deep pockets that wanted to come into this area and build up a cash crop business to say 400 to 600 acres, unless you could talk a farmer into selling who already has it, you would not be able to find land – that would be next to impossible," he said.

Real estate agents like Shields are rarely involved in farmland transactions anymore. It’s often word of mouth that spreads the sale of land to farmers, and even then it’s a select few who get to hear about it. Pasco knew of the 125 acres only because the neighbour who was selling it sent letters to the farmers he thought would be interested.

Marcel Smellink, a real estate agent from Iroquois, said it doesn’t matter where he goes – farmers are always asking him if he has land for sale. "It’s hard. I have many requests from farmers that they’re looking for land, preferably not far from their farm."

Around Iroquois, farmland is likely to go for $4,500 to $5,000 an acre, he said. Smellink didn’t think just going by word of mouth was always best, because the more people who know about the land, the higher price it’s likely to fetch.

Although the FCC reported no increase in values in Glengarry County, recent sales there have returned some of the highest prices around eastern Ontario. Shields said land close to Bainsville and Lancaster is going for upwards of $8,000 an acre. Demand is so strong that when dairy farmer Ian Cumming wanted to sell his land he sent out 20 letters to area farmers asking for their best offer within two weeks. He got six offers.

Heinzle agreed land around Lancaster and even St. Isidore is more expensive. But he added in St. Eugene, south of Hawkesbury, "we’re catching up very quickly."

Shields said farmers are coping with the scarcity and increasing prices in different ways. In a recent 180-acre sale, the buyer got a reasonable price because the seller sold the buildings separately. Shields has also seen a rise in clear-cutting, turning bush into usable farmland.

That’s what Heinzle did when he bought and cleared 250 acres of brush two years ago. He’s cultivating it now. "Three years ago it would have never paid to buy land and clear it, when between $2,000-$3,000 we could have bought good land. It’s a big difference now."

"Land is something they don’t make anymore," he said. "We’re losing some every day to construction and roads, and there’s always some development."

Shields agreed. "I’m sure you’ve heard the old saying, ‘They’re not making anymore land.’ If you don’t grab a piece and hang onto it, it’s just going to keep getting more and more expensive."