Farmer or not, it's great to live in Saskatchewan

Derek Shevkenek - Dec 16, 2017

Upon moving to Saskatoon in 1999 to chase my wife-to-be, suddenly a childhood conversation from the distant past came sprouting back to memory. I’d earnestly asked a friend, “Why would anyone want to live in Saskatchewan unless you’re a farmer?”

We’ve been here 18 years and it’s a great place to live and raise our family. And while we’re not farmers, we’re probably part-Hutterite now (no disrespect) due to our recent switch from mini to full-sized passenger van. We need enough room for the anticipated arrival of another miracle from above in October. The van has been named Behemoth. (Though truthfully, our 4 and 6 year-old daughters are trying to call it Big Blue Butt.)
 
BEHEMOTH FARMLAND VALUE GROWTH
 
Farmland values in Saskatchewan have been through significant change over the past thirty-plus years. And while the last ten years represents nothing short of behemoth growth, in the context of long-term history, where are we today?
 
I’ll use the beginning of 1985 as a starting point. (Farm Credit Canada data) However, given the significant distortion that occurs over that period of time, I modified the data to account for inflation. (Statistics Canada CPI)
 
In fact, without inflation factored-in, it would incorrectly seem that farmland values are almost 3 times (300%) greater at the end of 2016 compared to the start of 1985. However, the apples-to-apples inflation adjusted reality is that farmland values are up approximately 35%.
 
BACK TO THE FARMLAND FUTURE
 
Let’s go back and break the past 32 years into three distinct periods of time. First, from 1985 to 1992 farmland values in Saskatchewan lost a staggering 65%. Next, from 1992 to 2006 farmland remained at essentially the same level. However, from 2006 to 2016 farmland values rapidly increased over 3 times in real inflation adjusted value – an average of 12.7% per year.
 
Today, the rate of farmland value growth has slowed significantly. Those that have been able to hold farmland through these past decades have been rewarded, and those wanting to sell farmland appear to be doing so at an opportune time.
 
Whether Saskatchewan farmland values drop again, stay level, or climb further upward in the next 10 years, does it matter? After all, you get to live in Saskatchewan!
 
 
Inquiry welcome at www.dereks.ca. Opinions are those of Derek Shevkenek and may not reflect those of BMO Nesbitt Burns Inc. The information and opinions contained herein have been compiled from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness. BMO Nesbitt Burns Inc. is a Member - Canadian Investor Protection Fund. Member of the Investment Industry Regulatory Organization of Canada.


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