U.S. versus Canadian farmland prices

The average price for Canadian cultivated farmland was $6,900 per acre in 2025 compared to $8,150 (all figures Cdn$) per acre in the U.S. However, comparing value is a complex calculation, FCC economist Justin Shepherd wrote in an April 15 report.

 WHY IT MATTERS: Historically an advantage for Canadian crop producers, your land ownership costs per acre may not be the competitive edge they used to be.

For example, some U.S. farmland sits in zones with warmer climates and much longer cropping seasons, whereas some Canadian farmland stays snow-covered late into spring.

There are also variations in how Canadian farmland values are calculated.

To address this, Shepherd said, FCC calculated farmland value based on crop acres only and compared it to the equivalent U.S. value.

While U.S. cultivated farmland is more expensive, on average, than Canadian, the dollar per acre gap between the two countries has largely stayed similar since 2000.

Canadian land values have seen fairly consistent growth, averaging 8.7 per cent over the past decade, Shepherd said. U.S. growth rates have seen sharp spikes, such as between 2010 and 2015, followed by flat growth (2015 to 2020). The average growth rate for U.S. farmland was 5.6 per cent.

Since 2020, Canadian farmland values have risen faster than those in the U.S.

Canadian versus U.S. farmer revenue

Despite higher average land prices, U.S. farmers had a slight advantage over Canadians in ability to generate revenue from their land.

Using both countries’ agricultural balance sheets, Shepherd said FCC calculated the average farm is making mortgage payments on roughly 15 per cent of their farm’s real estate value.

Using the Saskatchewan Ministry of Agriculture’s formula for land investment cost, in 2025 newly-purchased Canadian farmland averaged a cost of $367 per acre. Owned land cost $143 per acre.

Using U.S. interest rates, newly-purchased U.S. farmland costs producers $381 per acre and owned land cost $127.

Last year, cultivated farmland payments accounted for 39 per cent of Canadian farmers’ grain and oilseed cash receipts.

“Meaning for every dollar earned, 39 cents went toward land payments,” Shepherd wrote.

The U.S. average was 33 cents per dollar of revenue.

“Although this calculation doesn’t include income from livestock or other sectors, it demonstrates that land costs as a percentage of grain revenues are comparable between Canadian and U.S. farmers,” Shepherd said.

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Well, the tide is going out in primary producer agriculture. Who will be left with clothes on?

Is the shifting tide due to the highest cost of production ever? The changing policy discussions? The geopolitical factors that come with trade wars? Or just the fact that weather events are becoming more common?

Whatever it is, there’s definitely a shift.

Growing up I never realized how much agriculture was trailing other industries in terms of financial acumen. We could once obtain loans with looseleaf net worth statements and personal tax returns. The words “accrual,” “debt service” or “working capital” were not words frequently thrown around, much less understood by most famers. 

In my early years agriculture was not profitable, and land was traded for property taxes. 

How things have changed.

As 2025 progresses, indicators of change have appeared. Banks are tightening up on reporting and covenants. Farms are starting to see cracks in their financial foundations. Even agricultural educational institutions are taking notice. 

A colleague of mine once commented that he had to be careful when discussing financial acumen with farmers during his presentations as it was a “touchy” subject. Well, guess what? Touchy doesn’t pay the bills.

As farmers move into a new reality of financial requirements, let’s break down the non-negotiables when it comes to running your business.

Accrual financial statements

For the first time, this spring I had a conversation with a lender who refused a restructure due to lack of historical accrual reporting. 

It was almost a breath of fresh air. 

For years the industry has been trying to push producers towards understanding and using accrual reporting over cash. Accrual allows the farm to identify if it’s profitable, not just if there’s money in the bank to pay the next bill. This is not to say that cash doesn’t have a place in key performance indicators, it just cannot be the only conversation.

Our partners to the south have been trying to push this standard for 30 years. Ever since the 1980s agriculture crisis, U.S. regulators and standards boards made it a key objective. But they have made little headway. 

I would like to think that Canada is closer but let’s say its efforts are the “best of the worst.” Over half of the primary producer industry has still not adopted accrual reporting and does not know if they are profitable year over year.

Call it the Holy Grail, but a true business requires accrual information throughout the year. Many of the farms we consult for now have internal controllers, monthly accrual reporting and know exactly where they stand in terms of profitability. 

This is how you can make decisions with no emotion, just data.

Budgets and projections

Budgeting is more of a spectrum than a destination. 

There are many factors that need to be considered when preparing a true projection that most fail to execute. The key areas of focus should be the following:

• Cost of production: The need to identify a farm’s true cost of production has never been greater. To move a step further you need to identify both an accrual and a cash number to appropriately market your product. One requires amortization (yes, this is a true cost as you are losing equity in your machines at a rapid pace per hour); the other needs debt payments as they are a cash drain and, depending on your leverage model, may be material. Overall, you need to identify a marketing plan that shows a sustainable return per bushel and per acre.
• Monthly burn rate: Without a monthly cash flow (preferably planned over an eighteen-month period) your ability to market falls only on price. For most farms, cash flow, logistics and many other factors go into when and how you market your products — even more so on livestock operations where you don’t have steady cash flow throughout the year. Knowing your monthly cash out-flows will help you make longer-term decisions.
• Capital planning: The time to decide on equipment and infrastructure is not when the salesperson sits down for a coffee. Most progressive farms create capital plans years in advance and stick to them. In the past, operations bought equipment in good years and then held tight when times got tough. This doesn’t allow for any future strategy or plan; it is purely emotional buying. Know what you can afford, when machinery requires replacement and how this affects your profitability and banking.

Key performance indicators

It still amazes me how many producers have never read a commitment letter from their lenders. 

On many farms, financial institutions are the only thing between them affording to put a crop in and calling the auctioneers. Agriculture is an equity rich-cash poor business and, as such, the ability to understand your key banking and internal ratios is more important than ever.

Following are the three indicators every operator should know at any point in their day:

• Working capital: How much cash you have available to cover future costs. This could be working capital cash in a bank account or grain in the bin that can be easily converted to cash. Working capital is calculated by your current short-term assets less your obligations due over the next year. This ratio determines how easily you can make sales and procurement decisions and whether you can take the family out for dinner on a Sunday night.
• Debt service: The indicator of whether you can make enough cash to pay your debt. For non-farm individuals this would be your employment income compared to your mortgage and car loans. For farms, this is whether over a three-to-five-year period the farm creates enough cash to cover the current debt obligations. This determines whether your banker will give you more money or shut the tap off.
• Debt to tangible net worth: Are your assets larger than the debt you maintain? This is the least important indicator with your lenders, but often a covenant, nonetheless. This indicates whether you have left enough of your personal wealth in the business in comparison to the bank’s risk. This often only becomes a broader conversation if land values decline or if you are slowly taking large amounts of cash out to buy personal assets.

Every time agriculture enters a down cycle the industry pushes primary producers into positive change.

It is an interesting trend as it follows the concept that good times create soft people, and hard times create hard people. 

Whether 2025 continues to be the year where we see the industry force change, only time will tell. But as an individual who speaks with a significant number of farms every year, I sometimes hope for short-term pain to force a long-term change.

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The increase will be 1.77 per cent, or about 1.5 cents per litre for milk going into processing plants, the Canadian Dairy Commission said Wednesday.

The commission had already published this increase in October, but said Wednesday that “exceptional circumstances” led to the decision to postpone its implementation.

The milk pricing formula includes 50 per cent of the year-over-year change in cost of production and 50 per cent of the change in the Consumer Price Index, or overall inflation.

After the commission published its proposal for the national pricing formula last month, however, the Canadian Federation of Independent Grocers (CFIG) invoked an “exceptional circumstances” process that leads to an additional round of consultations between the CDC and other stakeholder organizations.

Those stakeholder groups include the Consumer Association of Canada, Dairy Farmers of Canada (DFC), Dairy Processors Association of Canada, Restaurants Canada and the Retail Council of Canada, along with the CFIG.

During consultations, DFC said it recommended the delay because of ongoing food inflation.

Grocery stores have been under pressure from consumers and the federal government to stabilize prices, although some observers say most of the price increases are due to multiple factors within the supply chain.

Price changes for consumer products will vary on those factors.

Officials noted Wednesday the 1.77 per cent increase is well below the current overall inflation rate of 4.4 per cent.

— Karen Briere reports for the Regina bureau of the Western Producer.

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However, large-scale grain farmers could also use the technology if they think about it differently.

“Let’s say my brother and me are growing 1,500 acres of corn,” said Baresich, who owns Haggerty AgRobotics and also operates Haggerty Creek Crop Inputs and Marketing at Bothwell, Ont.

“(So) why are we growing that corn instead of tomatoes instead of a higher-value crop?”

The answer is labour.

He cannot find farm workers or afford to pay labourers to kill weeds and manage a high-value crop such as tomatoes.

As a result, Baresich and his brother grow corn because it’s manageable.

“The weed control options for the vegetable crops… (it’s) too much labour and work,” said Baresich, who spoke at the Agriculture Enlightened conference held Thursday in Winnipeg.

The host and organizer of the conference was EMILI, which is trying to help Canada become a leader in digital and precision agriculture.

“EMILI works with producers, industry and academia to advance the adoption of intelligent technologies and provide people with the skills and training required to succeed in a digital economy,” its website says.

READ MORE: Think outside the agriculture box for labour

Baresich spoke at the event and was joined on stage by Rick Rutherford, who operates Rutherford Farms north of Winnipeg.

Rutherford doubts that robotic equipment to spray weeds and perform other field tasks are useful on a 7,000-acre grain farm in Western Canada.

“We’re definitely not into robots yet,” he said.

“The return on something like that, today, in broad-scale agriculture isn’t there.”

Baresich agreed.

Putting a small robot into the field can’t compete with a large and efficient piece of equipment.

“Rick is correct. On a broad-scale (situation), labour is your lowest cost. So, removing the driver out of the sprayer doesn’t make any sense,” he said.

“If you’ve got a 60-foot seeder that can seed 400 acres per day, it’s hard to replace that with a robot. The ROI (return on investment) doesn’t work.”

However, getting back to his example of 1,500 acres of corn, Baresich said a robotic machine could change what a farmer grows.

Instead of seeding 1,500 acres of corn, Baresich could plant 1,400 acres of corn and 100 acres of onions or another high-value crop because the robot would do the work of a couple of paid employees.

This isn’t happening on his farm yet.

“We’re looking at it very closely,” he said.

“What we’re seeing in Ontario, we’re seeing a growth in the vegetable market and the higher-value crops.”

That sort of approach to robotic farm equipment could make sense in parts of Western Canada.

The region around Portage la Prairie, Man., for instance, is a major producer of carrots, onions and other vegetable crops. Maybe grain growers in the region could dedicate a portion of their acres to a higher-value crop if the robot was able to reduce labour and production costs.

This sort of innovation and adoption of technology could become more critical for Canadian farmers.

However, producers may be hesitant to take the risk and test it out on their farms.

That’s the benefit of groups like EMILI, which operates Innovation Farms on Rutherford’s land north of Winnipeg.

Innovation Farms is part of a network of similar farms across the country, called the Pan-Canadian Smart Farm Network.

At these locations, innovators and entrepreneurs can test and refine their agricultural technologies at scale or demonstrate the value of more established technologies.

These farms are critical because Canadian farmers want to see something that works under real-world conditions.

“It’s fun to look at those things (new technologies like robots), but you’re not moving the needle by saying, ‘I did this on 200 square feet,’ ” Baresich said.

“You’re going to move the needle by saying, ‘I did this on 70 acres.'”

— Robert Arnason reports for the Winnipeg bureau of the Western Producer.

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The Canadian Dairy Commission — the Crown corporation managing Canada’s milk supply — on Oct. 6 published the results of its Cost of Production survey, as a precursor to setting the annual milk price adjustment due to take effect Feb. 1, 2024.

The commission pegged the 2023 indexed Cost of Production (iCOP) at $93.09 per standard hectolitre, down 1.43 per cent from $94.44 in 2022, but marked the consumer price index (CPI) at 155.4, up 4.98 per cent from the 2022 level of 148.

The commission’s national pricing formula (NPF) is based on 50 per cent of the annual change in iCOP and 50 per cent of the change in the CPI, which in this case would result in an increase of 1.7736 per cent effective Feb. 1, 2024 — although the commission said that figure “is not necessarily equivalent to the next price adjustment.”

READ MORE: Farm-gate milk price increase predictable, says economist

The commission had given stakeholder groups until Friday (Oct. 13) to declare if they wish to invoke the “exceptional circumstances” process — which in turn triggers an additional discussion period with those groups but won’t necessarily lead to a change in the price adjustment.

The participating stakeholder groups include Dairy Farmers of Canada (DFC) as well as the Canadian Federation of Independent Grocers (CFIG), Dairy Processors of Canada, Retail Council of Canada, Restaurants Canada and Consumer Association of Canada.

With two out of three criteria met for invoking the exceptional circumstances mechanism — namely, an “unexpected event” in the view of the stakeholder making the request, and a spread of more than five percentage points between the change in iCOP and CPI — the CFIG has requested the process, the commission said in a statement Friday.

If the exceptional circumstances process hadn’t been triggered, the NPF result would have applied, and the commission would have moved on to hold consultations on the support price for butter.

Now, however, the commission said Friday its NPF result is suspended and the board will hold pricing consultations with stakeholder groups between Tuesday and next Monday (Oct. 23).

But the commission said it will still make a final milk pricing announcement by no later than Nov. 1, to take effect next Feb. 1.

‘In solidarity’

And while the NPF calculations may support a farmgate milk price adjustment of 1.77 per cent, DFC said in a separate statement Friday it will “recommend that this adjustment be delayed.”

“Dairy farmers and their families are also consumers and experience the high cost of food these days,” DFC president David Wiens said. “Recognizing the current level of food inflation and in solidarity with all Canadians, we have recommended the Canadian Dairy Commission delay its application of the price adjustment on milk until further notice.”

However, he added, the retail prices consumers pay for dairy are “ultimately determined by other players in the supply chain. Our hope is that our decision will result in other actors maintaining the price of dairy products at a time when food inflation hovers around nine per cent.”

The commission, in setting the 2023 iCOP, noted dairy farmers saw increases in most indexed key costs, including interest rates.

However, the commission added, those increases were offset by decreases in other costs, such as purchased feed; fuel and oil; and fertilizers and herbicides.

At the close of the cost indexation period in August, the commission said, “several indices seem to stabilize,” such as land and building repairs, and machinery and equipment repairs. — Glacier FarmMedia Network

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Freeland’s 2023 federal budget, released Tuesday, includes $13 million in 2023-24 for Agriculture and Agri-Food Canada to temporarily increase the interest-free limit for loans under its Advance Payments Program (APP) to $350,000 for the 2023 program year.

The interest-free portion of an APP loan was previously capped at $100,000 but that level was temporarily raised last summer to $250,000 for the 2022 and 2023 program years.

The APP provides farmers with cash advances of up to $1 million, based on up to 50 per cent of the anticipated market value of a farm’s eligible production, whether it’s still to be produced or is already stored.

“Farm production costs have increased in Canada and around the world, including as a result Russia’s illegal invasion of Ukraine and global supply chain disruptions,” Tuesday’s budget documents said. “It is important that Canada’s agricultural producers have access to the cash flow they need to cover these costs until they sell their products.”

On that note, the budget also committed the feds to “consult with provincial and territorial counterparts to explore ways to extend help to small agricultural producers who demonstrate urgent financial need.”

Fertilizer funding

On the matter of input costs, the budget also notes Russia’s invasion of Ukraine “has resulted in higher prices for nitrogen fertilizers, which has had a notable impact on eastern Canadian farmers who rely heavily on imported fertilizer.”

To that end, the budget proposes a $34.1 million addition to the federal On-Farm Climate Action Fund over three years, specifically “to support adoption of nitrogen management practices by eastern Canadian farmers, that will help optimize the use and reduce the need for fertilizer.”

That $34.1 million figure roughly coincides with a recent estimate of the tariffs collected so far on imports of Russian fertilizer into Eastern Canada. Several grower groups in that region have called for an end to that tariff and for farmers to be directly reimbursed for tariffs already paid.

Dairy development

Among other longer-term investments, the budget proposes $333 million over 10 years to set up what it calls the Dairy Innovation and Investment Fund, starting in 2023-24, to back development of new dairy products based on solids non-fat (SNF), a dairy processing byproduct.

The dairy sector is up against “a growing surplus” of SNF, for which the limited processing capacity in Canada “results in lost opportunities for dairy processors and farmers,” the budget said.

The new fund would support “investments in research and development of new products based on SNF, market development for these products, and processing capacity for SNF-based products more broadly.”

Inoculation inventory

The budget also pledges $57.5 million over five years starting in 2023-24, and $5.6 million ongoing, for the Canadian Food Inspection Agency to set up a foot-and-mouth disease (FMD) vaccine bank for Canada and develop FMD response plans.

Recent outbreaks of FMD in livestock in Asia and Africa “have increased the risk of global spread,” the budget said, and if an FMD outbreak were to occur in Canada it “would cut off exports for all livestock sectors, with major economic implications.”

The impact of a potential FMD outbreak “would be significantly reduced with the early vaccination of livestock,” the budget said. For the vaccine bank, the feds plan to “seek a cost-sharing arrangement with provinces and territories.”

The Canadian Cattle Association on Tuesday hailed the vaccine bank announcement, describing a vaccine bank as a “critical” investment which “helps provide necessary insurance to protect Canada’s export markets.” Several livestock groups have called for such an investment in recent years.

“While we hope this vaccine bank is never needed, we are grateful for today’s investment and its establishment,” CCA president Nathan Phinney said in a separate release. “We appreciate the government listening to our concerns and understanding the critical need to put in place emergency preparedness plans to control the spread of the disease and protect our export markets for Canadian beef.”

Risk management

CCA also hailed a separate budget line item pledging $184 million over three years to boost the Species At Risk Act. That funding goes to the federal environment, parks, fisheries and natural resources departments “to continue monitoring, protecting and promoting the recovery of species at risk to help restore their populations.”

“We will be engaging with the government of Canada to ensure beef producers are at the table as key stewards of lands where species at risk live,” the CCA said.

On that matter, noting cattle producers’ stewardship work on endangered native grasslands, Phinney said the CCA calls on Ottawa “to include support for protecting Canada’s grasslands in the future.”

Liquor and cannabis

Among federal sin taxes, the feds propose to temporarily cap the inflation adjustment for excise duties on beer, spirits and wine at two per cent, for one year only, as of April 1. Alcohol excise duties are usually automatically indexed to total Consumer Price Index (CPI) inflation at the beginning of each fiscal year.

The feds also announced plans to allow all licensed Canadian cannabis producers to remit excise duties on a quarterly basis rather than a monthly basis, also starting April 1. That move expands on a measure put in place for “certain smaller” cannabis producers in the 2022 budget.

On that note, the budget said, “while significant progress has been made in eliminating criminal activity in the cannabis market, licensed cannabis producers are currently experiencing financial difficulties as they help to build a stable, legal cannabis industry in Canada.” — Glacier FarmMedia Network

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The Canadian Dairy Commission said Tuesday it will recommend that the farm gate price for milk be increased effective Sept. 1 by $1.92 per hectolitre.

That increase, which works out to 1.92 cents per litre, “will partially offset increased production costs due to inflation,” the CDC said in a release, noting the costs of cattle feed, energy and fertilizer costs have risen 22, 55 and 45 per cent respectively since last August.

The CDC on Tuesday separately announced an increase to its support price for butter, also effective Sept. 1, boosting that rate from to $10.0206/kg, up from $9.7923.

The new farm gate milk prices are to become official on approval from provincial dairy authorities, which is expected in mid-July, the CDC said.

The Sept. 1 milk price adjustment translates to a 2.5 per cent increase on average for the price for milk used in the manufacture of retail and foodservice dairy products such as milk, cream, yogurt, cheese and butter, the commission added.

The farm gate price for milk is typically raised or lowered just once a year at the CDC to reflect changes in costs of production — a schedule Dairy Farmers of Canada said “creates a gap between the true costs of producing milk today and the next annual adjustment.”

DFC had said June 2 that the current “exceptional circumstances” call for a mid-year adjustment to help bridge that gap. The last such mid-year adjustment was made in 2018, the CDC said.

The CDC said Tuesday it “considered possible impacts of a price increase on consumers and demand” in its decision.

Dairy products “must remain affordable” for Canadians, the commission said, also noting dairy farmer revenue had improved in recent months on last February’s farm gate price increase as well as rising world dairy prices.

Factors such as transportation, distribution and packaging costs elsewhere along the supply chain will also play parts in the “net impact” on consumers, the commission said.

Make allowance

According to the Dairy Processors Association of Canada (DPAC), the CDC’s separate increase in the support price for butter works out to 2.3 per cent, reflecting both the mid-year farm gate milk price increase and an increase in the regulated “make allowance” of butter of 2.5 per cent.

The support price for butter is used by the CDC when buying and selling butter under its domestic seasonality program, which kicks in when regulated Canadian milk production exceeds domestic market requirements, at which point the CDC buys butter from processors at the established support price.

The make allowance, or processor margin, refers to the costs incurred to process milk into butter, including labour, packaging and other inputs.

DPAC said Tuesday it had asked the CDC, during its consultations last week, to consider making an upward adjustment in the make allowance. It cited estimates which suggest processor costs have risen more than 12 per cent since last August, mainly on prices for energy, packaging and materials as well as milk.

As for the farm gate milk price increase, DPAC said it doesn’t traditionally take a position for or against an adjustment the CDC recommends.

However, DPAC said, making a mid-year adjustment “will allow for dairy prices to increase more incrementally, and may mitigate the impact on consumers.”

The CDC said Tuesday that while the consumer price index for dairy has increased by 7.7 per cent over the last five years, it rose 14 per cent for meat, 21 per cent for eggs and 32 per cent for fish over the same period.

Over the last 12 months, it noted, farm gate milk prices in the European Union have risen by about 23 per cent. Class I (fluid milk) and class IV (butter and skim milk powder) prices in the U.S. have risen by 49 per cent and 55 per cent in the same period, compared to 6.6 and 38.3 per cent in Canada. — Glacier FarmMedia Network

CORRECTION, June 21: An earlier version of this article incorrectly stated the per-litre value of the announced milk price increase as 0.192 cents.

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The CDC said June 2 it had received a request from Dairy Farmers of Canada for the increase “due to the current inflationary environment.”

If it’s approved, and if the approval sticks to what DFC is requesting, the increase would take effect Sept. 1 and would be deducted from any increase coming out of the CDC’s “routine” milk price review this fall.

The CDC said its board will consult with stakeholders on the matter from Monday to Wednesday next week (June 13-15) and will announce its decision “in the days following these consultations.”

Normally, DFC said in a separate statement June 2, the CDC adjusts dairy farmgate prices once a year to reflect changes in costs of production, based on “numbers from the past year.”

Those numbers, DFC said, “do not reflect the current prices of inputs, which are skyrocketing.” Between last July and this March, costs have risen on inputs such as fertilizer, fuel and cattle feed, by 44, 32 and eight per cent respectively, DFC said.

The CDC pricing methodology “creates a gap between the true costs of producing milk today and the next annual adjustment,” the dairy farmer group said, and the current “exceptional circumstances” call for a mid-year adjustment to help bridge that gap.

Canadians, DFC said, generally understand dairy farmers “are not the cause of food inflation but have to adapt to the current reality just like everyone else,” and dairy farmers also understand the pressures consumers “in all walks of life” face right now.

“It is important to note that dairy farmers do not set prices at retail, or in foodservice, and the farmgate price of milk is just one of the many factors that go into the cost structure for the price paid by consumers for dairy products,” DFC added. — Glacier FarmMedia Network

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