Harvesting value
The scaling back of Farm Credit Canada’s survey of farmland values from twice a year to spring publication means the Re/Max Farm Report now enjoys a stand-out position in the field each fall.
Re/Max’s report serves as a counterpoint to the federal agency’s assessment of benchmark properties across Canada, providing comments from brokers on what’s happening in the marketplace. The latest edition indicates that the trend in rising values is moderating.
While turbocharged price growth on the Prairies, as well as Ontario and Quebec, drove up national farm values by an average of 22.1% in 2013, according to Farm Credit Canada (but just 3% in B.C.), Re/Max indicates that prices have been “levelling off” this year “following a stretch of record year-over-year growth.”
That’s probably good news for anyone looking to jump into the sector, though Re/Max presents a mixed picture of who’s doing what in B.C.
While the year’s harvest gives the province’s producers much to be grateful for this Thanksgiving, it’s producers in southern B.C. that are plowing profits back into expansion.
“Chicken and dairy farms with quota continue to be in high demand,” the report notes, with blueberry properties also experiencing stable demand as prices strengthened this year. “Buyers in this region are typically existing owners planning to expand their operations.”
Meanwhile, in the Peace River country, farmers are selling to new owners who plan to operate horse or hobby farms. The demand is for smaller tracts of land, even though properties boasting good-quality soil can trade for upwards of $650,000 a quarter (160 acres).
On a per-acre basis, that equates to approximately $4,000 an acre – competitive with prices just down the road in Alberta but well short of prices in the Fraser Valley, which can exceed $60,000 an acre.
Saddle up
While grain farmers have traditionally been the strong players in the Peace River region, competitive prices for farms in the B.C. Interior are largely responsible for driving sales to ranchers.
Crown land is available for grazing but competition for leases can make long-term control of one’s own range a desirable option, especially when it comes to optimizing management of herds and forage resources.
Two recent deals underscore the appeal of available ranches.
The Clover Farms ranch near Fort St. John was sold earlier this summer for $15 million by the Vancouver office of international brokerage Jones Lang LaSalle (JLL). The transaction included nearly 100 titles and just short of 31,000 acres, at an average price of almost $485 an acre.
The deal included 2,000 head of livestock, added listing agent Mark Lester, a senior vice-president with JLL and head of the brokerage’s specialized assets and land division.
“We had two competing purchasers for the asset, one of which was from mainland China,” he noted. “A Canadian purchaser was the successful buyer.”
A year earlier, Toronto-based Dundee Corp., through Blue Goose Cattle Co., acquired the Diamond S property in the Lillooet area. The deal added 18,000 acres to its holdings in B.C., which support a herd of 20,000 cattle.
“We are growing the herd, and we basically need land to continue to grow,” said Horst Hueniken, a portfolio manager who oversees agricultural properties for Dundee. “We’re looking, ideally, for lands that are not only productive but at a decent price – we don’t want to overpay, as nobody would.”
Lillooet fit the bill, as it did for Fort Berens Estate Winery, which located in the area five years ago on account of land that promised as much as Okanagan grape-growing properties but at a fraction of the cost.
Not so fast
Just who can buy farmland in Canada is open to debate.
While some provinces restrict foreign ownership, a confidential report for Agriculture and Agri-Food Canada notes that federal knowledge, let alone scrutiny, of purchases is limited.
Similar to other forms of real estate, the identity of agricultural land buyers is checked but their origins aren’t tracked.
“Canada doesn’t have policy levers in place to assess agricultural land investment proposals and decide if they are contrary to the national interest,” the report observed, suggesting the “regular collection of information on foreign ownership” as an antidote. •
