Farm equipment is becoming more important on Canadian farms.
The value of farm machinery in Canada has appreciated by 51% over the last 15 years. This appreciation is driven by increases in the amount of equipment on farms and upgrades to existing or new equipment.
Considering machinery values are increasing, farm equipment is becoming more important and producers need to stay competitive. One way is through adopting new technologies. Looking at the current year, strength in farm cash receipts may help drive equipment purchases, while a weaker Canadian dollar raises the costs of new farm equipment.
Farm equipment by province
The Prairie Provinces (Saskatchewan, Alberta and Manitoba) represent more than 80% of Canadian farmland, and therefore have a large influence on national trends. Since 1999, the value of machinery has appreciated by 58% in Saskatchewan, 55% in Alberta, and 49% in Manitoba.
The Maritime Provinces (Nova Scotia, New Brunswick, and Prince Edward Island) have a lower level of appreciation in machinery asset values at 34%. Expansion and/or upgrades in equipment are not happening as fast in these provinces. Newfoundland and Labrador had the highest level of machinery appreciation from 1999 to2014 in Canada at 76%. However, this data must be interpreted with caution as climate and terrain features may partly explain the trend compared to other regions.
Quebec, Ontario, and British Columbia had machinery appreciation of 55%, 38%, and 36% respectively.
Farm equipment values increase, but represent a declining percentage of total farm assets
Increasing land values dominate the balance sheets of producers. In the latest FCC Farmland Values Report farmland values increased 14% in Canada in 2014; and this appreciation came after significant increases in 2012 and 2013.
Farm equipment has gone from representing 15% of total farm asset values in 1999 to 8% of farm assets in 2014. In the same time period, the proportion of assets held in machinery in Ontario and British Columbia has halved from 10% to 5%, giving these two provinces the lowest proportion of machinery assets. New Brunswick and Saskatchewan have the highest amount of machinery assets for 2014 at 13%.
To learn more about the farm equipment market, read our recent Farm Equipment Sales Report.
Leigh Anderson, Senior Agricultural Economist