2024 Saskatchewan Farmland Study

[foragefarmer]

Another issue affecting Canadian land prices lurking under the surface is climate.
Anecdotally, we have a German neighbor who moved here( the western fringe of ag land) in the early 90's after researching all over the world and concluding that this area would be the safest /most productive place to be as the climate continues to improve(my term).

Look at the big land purchase at The Pas by Monette, is that a climate hedge?

There are reports predicting how much agriculture in Canada could expand in a warmer future. How many investors are looking at that and thinking that a rising tide lifts all boats?

We seem to be into a dryer/warmer trend in recent years. Could some of the investment money be betting on this trend continuing? Could be that some investors have never even been to the "semi arid prairie", never heard of the Palliser triangle and assume this is all tundra and will become an oasis with more climate improvement?

You should take that fact based information to the Bank next go around, make sure you bring your German neighbor along to co-sign.

Oil on his land too?

Throw in the $53.00/bushel canola farm wager as well.

[furrowtickler]

North east states have a program to buy your farm. City sludge has high level of pfas. Had to sign into program to get sludge spread. Once they found out it’s contaminated they go down the list of producers testing their products. Labeling their products not saleable. Some states are passing laws giving fertilizer distributers immunity. Makes one speculate what is going on. Once toxic waste is labeled a farm fertilizer only the npk has to have levels labeled,none of the toxic ingredients have to be listed. Crazy world.

There is a lot of filler in dry fertilizer that’s not good besides salt
you can pick out those who use strictly dry fertilizer here this year compared To liquid on many fields

[AlbertaFarmer5]

I never really got to the punch line of my comment above. When the climate cycle inevitably turns back cooler when this phase is over,, will there be a mass investor exodus from Canadian agriculture?

It would be interesting to try to correlate the land price chart to a temperature or drought index. It appears it would be exactly opposite to what I am suggesting.

[AlbertaFarmer5]

Forage, perhaps you should stick with posting in Chuck's kindergarten. Since you don't seem to have anything constructive to bring to the adult discussions.

[Grain Farmer]

There is a lot of filler in dry fertilizer that’s not good besides salt
you can pick out those who use strictly dry fertilizer here this year compared To liquid on many fields

Interesting comment
what difference are you seeing?

[wrongway]

You get tired of renting land with rocks real quick. Equipment depreciation is extreme and there is always work waiting for you picking someone else's rocks.
Low productivity can be a deal breaker.

An old guy once told me you can never pay too much for good land and too little for poor land.

[seldomseen]

I can’t add much to the conversation. Have no idea what land price will do.
I just wonder when a combine costs over a million what should a quarter of land be worth?
I really can’t see the price of a combine coming down any?

[furrowtickler]

Interesting comment
what difference are you seeing?

Just drive around
streaky patchy crops , mostly canola where higher rates used
not all the issue but fertilizer burn playing a huge part without question in general

3-4 weeks of no rain and high winds the main culprit is exaggerating the issues

[SmallTimeOperator]

In my younger years it was explained to me that land prices in Manitoba and Alberta were always higher than Saskatchewan because on average, they always produced a crop, but in Saskatchewan, droughts were common, and so land prices were considerably less due to the fact of common crop failures and the effects this has on the failure of farms.

Enter one pass seeding, chemical farming, high fertilizer rates and continuous cropping, a wet cycle and they are growing pretty good crops in the dry areas that used to be half crop and half summerfallow.

The influx of investors and new generation farmers who inherited farms with paid off machinery and working capital, have never known bad times. The investors keep buying more land, helping the young farmers double in size. The young farmers are using generational equity to expand as well. This has driven land prices higher than our wildest dreams.

The farmers are also buying or leasing million dollar combines, air drills, sprayers and tractors.

My gut instinct says all these guys are going to get schooled as soon as it gets dry for a multi year span or a combination of early frost and droughts. There has already been multiple dry years in some areas, including where I farm, but it hasn’t been widespread enough to cause a slowdown of some of these operations.

A multi year drought will crash the crop insurance coverages for these guys. Poor yields combined with poor crop insurance payments will gut cashflow. Lease payments on equipment have to be paid whether there is a crop or not as do the farm input loans. FCC and the banks will call their loans as soon as ratios get too tight and that will be the nails in the coffin for a lot of “successful” farm operations.

When the “successful” farm operations “retire” all within a few years, and their land is forced into a sale situation with no buyers, the crash will begin.

An investor I had spoke with this spring told me they haven’t been successful buying any land in the past year, saying the farmers keep winning all the land deals. It kind of raised my eyebrows and tamed my enthusiasm. That should be a clue to everyone, the first canary in the coal mine, that the investors can’t see clearly anymore. Add desperate BTOs determined to build an owned land base at the peak of prices because they were sitting back renting for the last 20 years, natives who have millions to spend from land claims settlements and the situation is starting to look a little crazy, with the horizon starting to come into plain sight because when both the natives, and the BTOs stop buying land at the same time, and the investors start fleeing the market because they know it’s overbought, what happens next?

Thanks Trent and Tim for all of your work. It has solidified my thought process and has given me some company knowing that I’m not the only one thinking this is all going to come to an end.

It has been said, that it’s not the decisions made in bad times, but actually the decisions made during good times that will break a farm. So very true.