Farm land prices push upward

BROCKVILLE — Farmers have paid up to $5,000 an acre for top farm land in eastern Ontario, real estate agents say.

While good-tile drained land has fetched $5,000 an acre, $3,000 to $3,500 an acre is still a good price for good land, said Brockville area real estate agent Allan Earle.

"I haven’t sold land at $5,000. I’ve sold land at $4,000 an acre. The $5,000 number will be limited to smaller acres and motivated neighbours."

One farmer reported a sale between neighbours at $7,000 an acre but later apologized for his misleading information when the deal didn’t go through.

"It always comes down to location," said Iroquois real estate agent Marcel Smellink. "If the land is next door, you’re willing to pay a premium. What the premium is, is up to each farmer. Is your land next to a big farm? It sells easier."

Smellink is seeing an increase in price pressure now for the best land and notes that in the past two years he has seen the average price of good farmland increase 25 per cent. "The push is on because of high corn and crop prices. The second reason might be that the large dairy farms need land to supply their own feed and need enough land base to spread manure to satisfy the nutrient management plan."

While there’s a buzz about a farmland price bubble in areas of the United States, the micro-market of eastern Ontario will not be affected, Smellink said. "I don’t think it’s a bubble here in eastern Ontario."

Why do I say that? If they can pay $5,000 to $6,000 an acre in southern Ontario in the past few years, why won’t people pay $4,000 to $4,500 (for top land in eastern Ontario)? And we’re at par or outyielding southern Ontario."

He said the best eastern Ontario cropland is from Winchester to Chesterville, South Dundas and Glengary Counties, and just south of urban Ottawa, where land will sell quickly at $4,000 to $4,500 an acre. A lot of land sells privately, he said.

"This is cash crop area," Smellink said. "What are farmers saying? They’re saying we should have bought two years ago when commodity prices were low."

On average, however, for all types of land, prices across Ontario increased only slightly last year over the year before.

"There weren’t a lot of sales last summer or fall," said Bob Wilson, Ontario land appraiser for Farm Credit Canada.

But asking prices are up this year. "I think some people were waiting to see what was going to happen in 2007," he said. "The beef industry was under stress. The hog industry was under stress and some area were under drought."

He added that there are more influences in the market now, indicating that spring prices in 2008 will likely reveal a healthy price increase over last year.