The discovery of a second cow afflicted with bovine spongiform encephalopathy – mad cow disease – linked to an Alberta farm has sent farmland prices tumbling across western Canada.
If you always wanted that little house on the prairie surrounded by acres of very quiet land, this may be the year to go for it.
“There are no buyers for pastureland,” said Craig Hellings, who runs a 1,300-acre crop and cattle operation near Moose Jaw, Saskatchewan, and publishes an online farmland sale site at www.farmprospects.com. “But we are seeing a lot of sale listings now.”
And there are bargains. Among Helling’s listings last month was a 3-bedroom house on more than 1,000 acres for $749,000 near Saskatoon. Or how about 22 acres with a nice house on a small lake for $85,000 just outside of Prince Albert, Saskatchewan. Even high-priced British Columbia is not immune. You can buy a riverfront house on 70 acres near Williams Lake in B.C.’s cattle country for $225,000, or about the price of a small condominium in downtown Vancouver.
When Farm Credit Canada, the largest lender on ranches and farms in the country, released the latest sale price figures to the end of the first half of last year, it showed that values had risen from a year earlier.
The FCC’s land values survey showed that average land prices rose 2.3 percent during the first six months of last year, continuing a three-year trend of escalating farmland values. There was a 2.6 percent increase in Alberta, 1.9 percent in Saskatchewan and 2.2 percent in Manitoba, for instance.
When the survey was conducted during the spring and early summer of 2003, prairie grain and oilseed producers were optimistic, confident of good crops and strong prices.
But that was before the mad cows gored the market.
“I suspect if we were doing the survey now, the results would not be as strong,” understated FCC assistant vice-president Jay Henryk.
Hellings said prices for cultivated land may hold this year at 2003 values, but he suspects the only market for cattle pasture will be from larger operators looking for bargains to expand their land holdings. “When things get tough,” he said, “the big get bigger.” Hellings sees land prices falling further as smaller ranchers suffer from the ongoing mad cow fallout.
He noted that the federal compensation package for Prairie cattle ranchers, which offered $159 per head for older stock that can not be slaughtered for U.S. export, convinced slaughterhouses to chop the price for cull cows to one cent a pound, compared to typical 14.5 cents a pound.
FCC official Roy Hjelte said a major factor in Saskatchewan was “buyers from outside the province continuing to show interest in larger parcels of land,” which are a lot cheaper in Saskatchewan than in Alberta or B.C.
Urban pressures also play a role in land prices. This has been especially pronounced along Highway 2 between Edmonton and Calgary, where Alberta farmers have found they can make more money selling land for new houses or malls rather than cattle or crops. There is no restriction on selling Alberta farmland for other uses, unlike most other provinces.
“As commuting zones increase in size around the urban areas, lifestyle and hobby farmers buying farms often pushed land values higher,” the FCC report said.
The FCC Farm Price survey is based on a survey of land values around 245 benchmark farms, including 100 in western Canada. The results were then extrapolated to conditions in the province and the region.
Frank O’Brien can be reached at email@example.com.
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