“Buy land, advised Mark Twain, because, as the punch line goes, they ain’t making any more of it. Fast forward to 2013 and that advice, as a look at prices for farmland shows, seems as prescient as ever.

The hottest sector of the country’s real estate market is, you guessed it, farmland. The price of farmland in Canada has outpaced both residential and commercial real estate, gaining an average of 12 per cent over the last five years. In some hotspots, such as southwestern Ontario, the price-per-acre has been going up by as much as 50 per cent a year. Even pension plans and hedge funds have become players in the pursuit of prime agricultural land, interest that is only sending prices that much higher.”

Further from Ontario Farmer (Ontario’s major weekly farm publication) By Anne Howden Thompson –
“Peak commodity values and low interest rates prompted an “unprecedented” farmland demand over the last 12 months, generating “serious year-over-year increases in most rural communities” according to The RE/MAX Market Trends Report: Farm Edition 2013 released last week. The report examines market prices across 17 markets in Canada and indicates bare land continues to generate the greatest demand, with tiled and irrigated speciality cropland “fetching top dollar”. Some examples:

• Northern Saskatchewan 2013 land price $1500 to $2000 per acre up from 2012 range of $800 to $1500

• Central Alberta 2013 land price $3,400 to $6,500 per acre up from 2012 range of $2000 to $4,500

• Ontario (London St. Thomas market) 2013 land price $12,000 per acre up from 2012 price of $7,500

• Ontario (Kitchener-Waterloo market) 2013 land price $15,000 to $18,000 per acre up from 2012 range of $11,000 to $15,000”The two quoted Ontario markets are where the bulk of the Ontario pork production is raised and although I appreciate you “can’t eat equity” has done much to sustain Ontario pork producers (the majority who are land based) through the challenges and pressures of the last number of years.

The interesting thing now will be where to from here. Crop producers have had a nice run the last few years but pork producers perhaps better than any agriculture producers understand “that the market giveth and the market taketh away” and everyone gets there “turn in the barrel”. Crop producer’s turn may be coming up.

I believe there is an adage in the US that when some event/phenomenon makes the cover of Time Magazine it’s over and time to sell. The thinking being once something is “common knowledge” to the “common man” the thing being discussed has passed. Will this prove to be the case with farmland? Like everything time will tell, but in the commodity business and in the end land is just another commodity, thinking any commodity can only go one direction being it up or down, usually ultimately proves dangerous.

In my last column 2 months ago I suggested we were on the edge of profitability and producers were wondering if it was going to be like so many times before, fleeting. “Ontario/Canada pork production like the rest of North America looks into the promised land of the prospects of good hog prices coupled with lower feed prices (perhaps substantially lower feed prices) resulting in the type of margins required to begin to heal this industry.”

Well, if we take a look at the OMAFRA Weekly Hog Market Facts compiled by John Bancroft, Market Strategies Program Lead, Stratford OMAFRA [email protected] we see a significant and encouraging plumping of margins continuing and with the base market hog price (100% Formula Price) an amazing $60 over the same week a year ago heading towards the fourth quarter and corn & SBM falling like a stone probably fair to say “we have something different going on”.