shutterstock_113279347Far from the hustle and bustle of big cities, farmland is experiencing a trend never seen before. Bidding wars for prime farmland are starting to heat up as commodity prices increase and availability of arable land decreases.

According to the 2012 edition of the Re/Max annual farmland market survey, Ontario’s rich agricultural areas are suddenly attractive to investors, with the price per acre almost doubling in the last couple of years.

Much of these gains can also be attributed to Ontario’s long growing season, which provides great return on cash crops. And as commodity prices continue to rise, those cash crops will continue to provide even greater return, while increasing the land value.

It’s a vicious cycle that has caught the attention of speculators and hedge funds, not just farmers, who are looking to cash-in.

As an agent who specializes in farm sales, I have noticed a significant number of land purchases in the GTA from International investors.  In 2012, I represented sellers and buyers in the sale of millions of dollars of farm real estate with the Region of Durham.  This area offers Class A cropland at a very attractive price of approximately $6,500 per acre, as compared to Whitchurch/Stouffville, which is now valued at more $20,000 to $25,000 per acre.

It’s an interesting situation to be in after many years of farmland values being stagnant or decreasing, but according to the report, there is uncertainty as to whether this will continue to be a trend in Ontario, or across the country. It is noted that low interest rates, and low inventory, are also playing a role in the increased value. The low inventory is a direct result of many farm owners renting out their land, rather than selling, when they retire.

Of course we have to put this all into perspective and realize that the price of farmland here in Ontario is still modest compared to prices in B.C.’s Fraser Valley where an acre of land runs anywhere between a whopping $40,000 and $60,000.

If you’re looking for an agent to help you buy or sell farmland, or just want to talk more about the forecasted values of farmland within the various Regions within the GTA please contact me directly at 289-338-0767.