Brutal Drought in Canada: Livestock producers receive financial support & potential impact on farmland values

Canadian agriculture is facing a brutal drought and farmers are receiving monetary relief. However, due to limited farmland supply, real estate values are holding steady despite the tough, ongoing weather conditions across the providence.

For the second time in three years, Canadian livestock producers in Alberta will receive $165 million in federal aid in an effort to help farmers manage extraordinary costs and cover any losses incurred in their breeding herds. The funding comes from the AgriRecovery Initiative and was intended to be a one-in-15-year relief program.

Drought Conditions: Abnormal to “Exceptional”

The latest Canadian drought monitor shows Northern and Southern Alberta are covered in anywhere from “abnormal” to “exceptional” drought conditions. The chair of the Bison Producers of Alberta said this dryness has caused a number of lost grazing days, which, in turn, is contributing to higher feed costs for producers in the region.

Drought Impact on Farmland Values

Despite the ongoing drought across Canada, farmland real estate values remained relatively stable in the first half of the year in the providence.

Due to limited farmland supply in the country, prices are inching upward. The average price increase for the first six months of this year stands at 7.5 percent, which stands slightly lower than this time in 2022. However, Farm Credit Canada reported recently they are seeing more caution in the farming community this year due to higher interest rates.

“We’re seeing a little bit more caution; bottom line is, there’s still demand out there,” said J.P. Gervais, Vice President and Chief Economist at Farm Credit Canada. “At some point in time, we probably need to have realistic expectations that they’ll be slowing down at some point — so that prices and production growth can catch up with land evaluations.”

The group said caution is no surprise considering the tandem elevation of producer input costs and looming uncertainty over commodity prices.

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