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Potential impacts of COVID‐19 on Canadian farmland markets

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  • Chad Lawley

Abstract

Evidence from the past 50 years suggests that changes in Canadian farmland values are influenced by farming returns, real interest rates, and exchange rates. Residential and commercial development also affects the value of farmland close to major urban centers. The COVID‐19 economic shutdown is expected to reduce crop and livestock returns, which will put downward pressure on farmland values. The magnitude of this downward pressure will depend on the extent and the length of the recession. The evolution of interest rates over the next months and years could have a significant impact on farmland values. Historically, low real interest rates have coincided with higher farmland values, whereas high real interest rates have caused significant reductions in farmland values. The development value of farmland close to major cities could be negatively impacted by a sharp downturn in residential and commercial property markets. Les données des 50 dernières années suggèrent que les changements dans la valeur des terres agricoles canadiennes sont influencés par les rendements agricoles, les taux d'intérêt réels et les taux de change. Le développement résidentiel et commercial affecte également la valeur des terres agricoles à proximité des grands centers urbains. La fermeture économique due à la COVID‐19 devrait réduire les rendements des cultures et du bétail, ce qui exercera une pression à la baisse sur la valeur des terres agricoles. L'ampleur de cette pression à la baisse dépendra de l'étendue et de la durée de la récession. L'évolution des taux d'intérêt au cours des prochains mois et années pourrait avoir un impact significatif sur la valeur des terres agricoles. Historiquement, de faibles taux d'intérêt réels ont coïncidé avec des valeurs de terres agricoles plus élevées, tandis que des taux d'intérêt réels élevés ont entraîné des réductions importantes de la valeur des terres agricoles. La valeur de développement des terres agricoles à proximité des grandes villes pourrait être affectée négativement par une forte baisse des marchés immobiliers résidentiels et commerciaux.

Suggested Citation

  • Chad Lawley, 2020. "Potential impacts of COVID‐19 on Canadian farmland markets," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 245-250, June.
    • Handle: RePEc:bla:canjag:v:68:y:2020:i:2:p:245-250
    DOI: 10.1111/cjag.12242
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    References listed on IDEAS

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    Cited by:

    1. Alan P. Ker & Ryan Cardwell, 2020. "Introduction to the special issue on COVID‐19 and the Canadian agriculture and food sectors: Thoughts from the pandemic onset," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 139-142, June.
    2. Samba Diop & Simplice A. Asongu, 2023. "The Covid-19 Pandemic and the New Poor in Africa: The Straw That Broke the Camel’s Back," Forum for Social Economics, Taylor & Francis Journals, vol. 52(2), pages 143-154, April.
    3. Hillary C. Ezeaku & Simplice A. Asongu, 2020. "Covid-19 and Cacophony of coughing: Did International commodity Prices catch influenza?," Working Papers 20/040, European Xtramile Centre of African Studies (EXCAS).
    4. Alan P. Ker, 2020. "Risk management in Canada's agricultural sector in light of COVID‐19," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(2), pages 251-258, June.
    5. Margarida Rodrigues & Mário Franco & Rui Silva, 2020. "COVID-19 and Disruption in Management and Education Academics: Bibliometric Mapping and Analysis," Sustainability, MDPI, vol. 12(18), pages 1-25, September.
    6. Hillary C. Ezeaku & Simplice A. Asongu & Joseph Nnanna, 2020. "Volatility of International Commodity Prices in Times of Covid-19: Effects of Oil Supply and Global Demand Shocks," Working Papers 20/101, European Xtramile Centre of African Studies (EXCAS).
    7. Chad Lawley, 2021. "COVID‐19 and Canadian farmland markets in 2020," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 69(2), pages 291-298, June.
    8. Tomas Baležentis & Mangirdas Morkūnas & Agnė Žičkienė & Artiom Volkov & Erika Ribašauskienė & Dalia Štreimikienė, 2021. "Policies for Rapid Mitigation of the Crisis’ Effects on Agricultural Supply Chains: A Multi-Criteria Decision Support System with Monte Carlo Simulation," Sustainability, MDPI, vol. 13(21), pages 1-31, October.
    9. Yanqi Han & Hui Lyu & Shixiong Cheng & Yuhang He, 2022. "Influencing Mechanism and Difference of Poultry Farmers’ Willingness and Behavior in Breeding Scale—Evidence from Jianghan Plain, China," IJERPH, MDPI, vol. 19(3), pages 1-15, January.

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