Is that time of year when I am finishing things up. Harvest is in the rear-view mirror but there is still a myriad of tasks to get done before the snows and ice of a cold Canadian winter settle in.  We’ve had a lot of rain and I was encouraged to see when I looked at my tile drains today how the water was running steadily. It made me think my land was in good hands at least until Mother Nature turns it all to ice.

Some of that land I bought 40 years ago in one of the toughest times I’ve ever seen on the farm. I know that many of you don’t want to hear about it but of course that was the time were interest rates were over 23%.  It was at that time in the 1980s that we actually saw Ontario farmland values decrease 25% going into the 1990s. That was a very long time ago now and of course I still farm some of those lands I bought at that time. Who knows where we’re going from here?

I recently read an article in an agricultural publication which asked where would the value of farmland be in the next 10 years?  A few weeks ago, I wrote about my 37-year journey of writing this column but of course at the same time I could have written about that 40-year journey of me buying farmland. At this juncture of my career maybe I should take a look back. However, I did think the theme of that particular article was a good one, where will farmland prices be in 10 years? Specifically, where will farmland values be in your neighborhood whether that’s in southwestern Ontario or southwestern New Jersey?

That is a deep question and I think it is very personal for everybody. For instance, if you had asked that young kid 40 years ago where the price of land would be in 10 years, I’m not sure he would quite know. At the time, I was very fixated on making the payments and making sure I could make a crop grow. Little did I know at the time that the farmland I had bought at the beginning of the 1980s would actually be worth close to 50% less at the start of the 1990s. What I didn’t know was in 2023 the same land would be worth 10 times what I paid for it back then.

I suppose you could say this is where that young kid back in 1981 needed to have better vision. In other words, why could I not see ahead like I can now see in retrospect? In many ways, it’s an indictment on me but in other ways not so much.  I was just a young kid without any money at that time, very few creditors would even look at you. Needless to say, regardless of that, the vision thing is still critical. If I could have accessed the capital and had the vision to contemplate where agriculture was going, I would likely be a land baron today.

Everybody who has been on a similar journey would have a personal opinion about farmland pricing and how they handled all of its dimensions. At this present time in my neighborhood land is trading in the $25,000 to $30,000 dollar per acre range with some farmland in Ontario trading for much higher than that in supply managed heavy areas.  There are myriad of buyers and sellers.

Historically, farmland value has been related to the income that you can derive from the land. part of what makes farmland so expensive today is the higher interest rates and the revenue from the farmland has not corresponded with the increase in farmland value.  As it is, according to Farm Credit Canada, farmland across Canada jumped up an average of 12.4% last year.  That young kid from 40 years ago paying 23% interest would be just shaking his head!

So, what will be the price of farmland in Ontario in 10 years’ time?  I’ll go out on a limb here and say it’ll be higher! Forget Ontario for a minute and consider your own neighborhood. I assume it will be higher there too.  How much energy do you have?  Do you have the energy and financial resources to continue to farm more and more land.  Do you have the capacity to take on debt levels, which you will never pay off simply passing them into the future?  Or will we face an apocalyptic event somewhat the same as faced me over 40 years ago pushing interest rates to stratospheric levels compared to today with the corresponding slump in commodity prices?

The answers to these questions are blowing in the wind as that old man Bob Dylan once sang. However, remember that the same questions were blowing in the wind back in the early 1980s when your loyal scribe started buying his first farms. The value of farmland is a complicated issue, as it usually involves the highest value asset on the farm balance sheet.   It’s important to get it right.  At the end of the day, much of it is about the vision of where you want to go. I can’t help you with that.  It’s always been hard enough for me to get it right.