SOUTHEAST SASK. — A lack of available farmland for sale is continuing to push land values higher, according to the mid-year farmland values review by Farm Credit Canada (FCC). In the first six months of 2023, the national average growth rate of farmland was 7.7 per cent.
The highest farmland value increases over the last six months were reported in Saskatchewan (11.4 per cent) and Quebec (10.6 per cent). Ontario and Manitoba saw nearly identical increases, with farmland values in Ontario increasing by 6.9 per cent, and Manitoba by 6.4 per cent.
Alberta had a more modest increase of three per cent, while the average price of farmland stayed unchanged in British Columbia. According to FCC, fewer sales were available in Canada's Atlantic provinces to fully assess mid-year farmland values. 
Most regions in Saskatchewan saw farmland values increase by seven to 11 per cent, indicating steady demand across the province. The north east region saw the strongest demand, leading to above-average growth relative to the rest of the Prairie province. Low precipitation has increased the appeal of heavy clay soils for moisture retention.
"Limited land for sale has been driving farmland values higher over the last six months," said J.P. Gervais, FCC's chief economist. "With higher interest rates, elevated farm input costs and uncertainty regarding future commodity prices, producers are being cautious with their investments and capital expenditures."
Farm cash receipts are anticipated to increase 6.6 per cent in 2023. But as farm operations exercise caution in spending, farmland value appreciation is anticipated to slow until the uncertainty over the current economic environment vanishes.
"Purchasing farmland is a very strategic decision for producers," said Gervais. "They need to assess whether they can earn enough from the larger land base they've acquired and if not, whether other areas of the operation generate enough income to pay for the land. Monitoring farmland price trends can assist in making the best decisions for individual operations."
The southeast corner of the province has also seen significant growth in prices over the past few years. Norm Mack with Mack Auction Company, which has been auctioning Saskatchewan farmland for two decades, said the switch to timed auctions that happened about five years ago also affected the market as well as the growing demand for land.
"We're very busy selling farmland this fall and through the winter and prices are strong," Mack said. "We see the growth of strong prices continue, even though the interest rates have gone up a bit. Most of our land purchasers this year have been neighbouring farm-family operations that want to expand and get more acres for operations, farm companies, not so much foreign investment.
"We see a strong demand for land. Land is a limited resource. There's only so much in the world, and people are taking notice that Saskatchewan is the breadbasket of the world," Mack said, adding that the value of land is being reflected in prices they see in southeast Saskatchewan now.
"People are finding out that selling farmland by our Mack timed auctions is the way to go because it gives everybody a fair chance. Neighbours, renters, family, everybody has equal opportunity. And also, it's an indicator of the true value of that land, because whatever they're willing to bet, that's what that land is worth that day. That's why we're a popular choice when farmers sell their land in Saskatchewan."
The increase in farmland prices is a continued upward trend, and Mack believes it has gone undervalued for a long time until recently. Not only is it good farmland, but it also often comes with surface oil revenue, allowing for extra income for farmers.
Mack Auction Company now sees farmland occaionally selling in the $500,000 range.
"We sold some land recently for $520,000 a quarter. We are seeing high fours-fives [$400,000-$500,000] right now. It really depends on the area, where you are in Saskatchewan. It also depends on how good the land is. It depends on neighbouring farming operations and the demand. There's a lot of variables that give you that price, but we have been selling land in the low fives and high fours," Mack said.
He added that having an open competition for land, supported by growing demand allows local farmers to retire with what they get out of land sales. And the fact that in most cases it's local farming operations expanding when someone retires is encouraging.
"People think it's maybe foreign investment … But no, it's local farmers that we're selling to that need more acreage for their operations, whether they're expanding with their sons or whatever, they need more acres," Mack explained.
While there is high demand for land, there is also quite a bit of offering. Mack Auction Company alone has 40-50 quarters coming up for sale in the next 1 1/2 to two months, Mack said.
"We're signing more every day. We look after all the legal work of it. We run the auction and help using the technology that we have. It provides the farmer with the best fair price for everybody. And it's a really true indicator of what the land is worth when we do sell it," Mack said.
"We like to think that Mack Auction was the pioneers in Saskatchewan land auctions for the last two decades and now that we've proven that this is how to sell land, it's really taken off," he added.
For information on upcoming sales, not only in the southeast but also in other areas of Saskatchewan, and to register to bid, people can visit their website at mackauctioncompany.com.
