About 40 percent of all Canadian farmland is rented. While that number runs a bit higher in the central Canadian region of Ontario and Quebec, the number of rented acres tends to be a bit lower in the Prairies.
Farm Credit Corporation, better known as FCC, is Canada’s largest farm lender, and a federal government agency. FCC has been tracking and analyzing farmland rental prices, in depth, for the past three years. Vice-president and chief economist, J.P. Gervais, says that 40 percent level has increased slightly, but based on fewer properties selling recently, the number has stabilized in 2023.
Gervais says, “40 percent is an average, so if you were looking at some of the provinces in central Canada, you would probably find a little bit of a lower percentage of land that is being rented. There’s a little bit of stability now, I’d say in the data, which is not surprising given that we’ve been reporting land available in the market as very thin. So, that makes sense that this number is actually quite stable now.”
In its latest report FCC says the Canadian farmland acreage broad-average rental rate is just over two and a half percent, based on the market selling price evaluation for an acre of land. However, Gervais reports that the average percentage rate is closer to the one and a half to two percent range in Ontario due to extremely high land prices – especially in southern Ontario. It is not unusual for land to sell in the $20 to $30 thousand per acre range in southwestern Ontario. Conversely, Prairie province land rental rates are holding in that two and a half percentage average based on their current acreage price.
Gervais says, “The national average is 2.5 – 5, and you have Prairie provinces that are right on that average. And you’ve got Manitoba at 2.4, Saskatchewan at 2.1 percent, and then Alberta at 2.6. For the other provinces land rental rates did go up, but not as much. The average land value in Ontario has to be lower – you wouldn’t be able to make a profit on Ontario with those rental rates.”
While Ontario farmland owners receive a smaller percentage, relative to the higher value of their land, Gervais explains that Ontario farmland owners still capture a larger revenue return. Gervais says, “That rental-rate in Ontario captures a greater share of farm revenues, when you look at a typical corn-soybean rotation, compared to what it would look like, for example, in Saskatchewan with a typical wheat-canola rotation, evaluated at average yields, average prices. So, that rental-rate, even though it’s a lower percentage, it captures a greater share of gross revenues compared to Saskatchewan. And I think that explains some of the differences that we have.”