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by gruez
1611 days ago
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>That's driven by the farmland bubble. [...] >The gigantic gains seen, which bring up the country average, are limited to the prime agricultural areas, namely Toronto and Vancouver, where farmers are now willing to pay more than developers for undeveloped land. Something that is historically unusual. Why is farmland in those areas so sought after? Were canadian farmland historically underpriced? Is the land just really good farmland? Are speculators buying it because of global warming? |
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Further, the way into these sectors is to buy what we call quota. Dairy farmers in Ontario imposed a price cap on quota back in 2006 in an effort to make it accessible to young farmers. While the fair market value of quota has likely doubled in the meantime, the maximum price you can pay is what it was in 2006. This means that there is even more cash floating around, that historically would have been tied up in quota purchases, in which to buy farmland with.
2. Increased profitability in agriculture in general. The US ethanol subsidy program of 2007 set the stage for significant increases in the price of field crops. As that program winded down and prices were coming back down, the US midwest got hit with three major weather events over the intervening years that decimated their crops, boosting prices again for those who had one. Not to mention that the US Farm Bill has been modified over the years to be more favourable to foreign countries like Canada.