The Impact Of Political Culture On Farmland Values In Canada

Since the early 1970’s, average farmland values have been consistently and significantly higher in Alberta compared with Saskatchewan and Manitoba. The most fundamental reason for higher farmland value is normally higher quality land, which grows better crops, producing greater gross and net incomes. However, when comparing average net farm incomes per acre (including grain, livestock and programs) for the period 1973 – 2000, Alberta farmland had the lowest at $9.90/acre (Saskatchewan was $12.74/acre and Manitoba was $15.28/acre). The main conclusion is that Alberta’s higher farmland values are supported by the valuation fundamentals; however, it is unknown whether the differences in provincial farmland values are fully explained by the differences in growth and required return on investment. There are a number of other possible factors that may influence farmland values, including political culture, either by directly affecting supply and demand or by indirectly affecting growth and/or risk.