Current farmland values are anything but ‘dirt cheap'

The term "dirt cheap" was first recorded in 1819 according to the Merriam-Webster dictionary and is defined as being extremely inexpensive. While this idiom may have accurately described soil, dirt, or land prices centuries ago, farmland today plays a significant role by supplying food, feed, fuel, and fiber globally. Moreover, for most grain and oilseed producers—including those in Canada—farmland represents their primary asset reflected on their balance sheets.

The average value of Canadian farmland continued its steady ascent in 2025, with an increase of 9.3%, the exact same appreciation as last year. However, while the national number is the same, the provinces and regions which make that up shifted. Alberta, Manitoba, New Brunswick, and Prince Edward Island all increased at higher rates than the prior year and the largest decline was seen in British Columbia. In general, growth in values continue to be supported by limited supply of farmland for sale, slightly lower interest rates, and strong margins from 2021-2023.

This post marks the third consecutive year of our in-depth analysis into the underlying factors driving farmland value growth. We investigate the relationship between Canadian grain and oilseed margins and subsequent increases in farmland values. For this year, we have introduced a comparative study of cropland values between Canada and the United States.

Canadian cultivated farmland values are correlated with margins

It is not a leap to think that higher grain and oilseed margins for producers are connected to the ability to potentially pay more for farmland during the following year. Better margins and cashflow lead producers to be more interested and in a better financial place to expand the following year, supporting demand for cultivated farmland. For example, average Canadian farmland values grew 13% in 2022 which was supported by strong grain and oilseed margins of 31% in 2021 (Figure 1).

Margins dropped but stayed historically high in both 2022 and 2023 and farmland values grew again in the following two years. However, when we get into 2025, we need a deeper dive as we see Canada’s 9.3% growth in farmland values, but margins in 2024 were considerably tighter than the prior 3 years. For some producers, coming off multiple good years likely left them in a strong financial position. In addition, the supply of land was tight which helped support prices.

Figure 1: Canadian cultivated farmland values are connected to prior season margins

Sources: Statistics Canada, FCC Economics

Can we draw any forward-looking conclusions from this? We know margins tightened further in 2025 for most grain and oilseed producers and we must look even further back in time to find those higher margin years. On the supply side, how much land comes on the market will continue to play a major part as well. Overall, it looks like cultivated farmland growth should slow this year.

Comparing Canadian cultivated farmland value growth to the U.S.

To begin, it is important to acknowledge the complexities inherent in comparing two neighbouring countries with distinct characteristics. Although some provinces and states share similar agricultural practices and climatic conditions, the United States possesses farmland located sufficiently south to offer year-round warm environments, whereas Canada has northern regions where farmland remains snow-covered for much of the year. The types of crops cultivated, and the respective ownership restriction policies introduce further variables that may influence outcomes.

Additionally, there are variations in how Canadian farmland values are calculated. To address this, we have determined a Canadian cultivated farmland value weighted by crop acres only and compared it to an equivalent U.S. value. Conversion of U.S. values into Canadian dollars allows for a more accurate comparison. Therefore, this analysis will focus exclusively on national figures for each country and maintain a straightforward approach.

The average price for Canadian cultivated farmland in 2025 was $6,900 per acre, slightly lower than the $8,150 per acre price of average U.S. farmland (Figure 2). However, when we look back since 2000, both countries cultivated farmland values have moved upwards and the dollar per acre gap between the two countries remains roughly the same today. Noticeable differences are where the U.S. land market from 2010 to 2015 had periods of very sharp growth, followed by a period of flat growth (2015-2020) before sharply increasing again. Canadian cultivated farmland values meanwhile have showed more consistent growth rates, averaging 8.7% over the last decade (whereas the U.S. only grew at 5.6% in that time).

Figure 2: U.S. cultivated farmland values trades at a premium relative to Canada

Sources: USDA, Statistics Canada, FCC Economics

Producers’ ability to generate revenues from owned cultivated farmland

To assess the affordability of cultivated farmland prices in both Canada and the U.S. for owned land, we rely on the Saskatchewan Ministry of Agriculture’s formula for land investment cost. Both countries’ agricultural balance sheets reveal that farmers typically have about 85% equity in their operations. Since farm real estate makes up the largest share, we assume that cultivated farmland equity matches that percentage, meaning mortgage payments are only required on roughly 15% of farm real estate value.

We apply a 1.5% opportunity cost to each country's existing 85% land equity. Opportunity cost refers to the value of an alternative investment, such as earning interest from treasury bills, instead of holding farmland. The remaining 15% is allocated to mortgage principal and interest over 25 years. In 2025, newly purchased cultivated farmland in Canada averaged $367 per acre, while using this method, owned land costs $143 per acre. Using U.S. interest rates, newly purchased American ground costs producers $381 per acre, while owned land is $127 per acre. We use the owned land value multiplied by total seeded acres as a percentage of grain and oilseed revenues to create a ratio as shown in figure 3. This allows for a comparison that removes the impact of exchange rates.

Owned cultivated farmland payments, as a share of revenue, reached their highest level since 2000 in both Canada and the U.S. Last year in Canada, cultivated farmland payments accounted for 39% of grain and oilseed farm cash receipts—meaning for every dollar earned, $0.39 went toward land payments. The U.S. average was $0.33 per dollar of revenue, offering a slight advantage to American farmers. 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.

Figure 3: Owned cultivated farmland payment as a percentage of revenue in Canada is now well above the U.S.

Sources: Statistics Canada, USDA, FCC Economics

Since 2020, farmland values in Canada have risen faster than those in the U.S., which has reversed the previous Canadian advantage of lower land ownership costs per acre. Still, even though farmland payments now make up a larger share of producers’ revenue, most have maintained enough cash flow to meet their yearly payment requirements.

What will drive farmland affordability in 2026

It turns out the phrase ‘dirt cheap’ has lost its literal meaning in today’s context, as farmland has become a vital asset for producers, underpinning both their balance sheets and the broader agricultural economy. While American cropland trades at a premium relative to Canada, affordability challenges are underscored by the rising share of farm revenue dedicated to owned land payments—39% in Canada, surpassing the U.S. at 33%. This shift has reversed Canada’s historical advantage and reflects the impact of strong cropland value growth. Despite increased payment burdens, most producers have maintained sufficient cash flow to meet their obligations, thanks in part to prior years of strong margins and equity in operations. With how tight margins are in grain and oilseed production right now, slower farmland value growth could help long term.

Justin Shepherd

Senior Economist

Justin Shepherd is a Senior Economist at FCC. He joined the team in 2021, specializing in monitoring agricultural production and analyzing global supply and demand trends. In addition to his speaking engagements on agriculture and economics, Justin is a regular contributor to the FCC Economics blog.

He grew up on a mixed farm in Saskatchewan and remains active in the family operation. Justin holds a master of applied economics and management from Cornell University and a bachelor of agribusiness from the University of Saskatchewan.

Read next

Farmland values held strong again in 2025

7 min read

Farmland values

In 2025, Canadian cultivated land values increased amid high demand and low supply, while pastureland values rose at a slower pace as producers prioritized herd expansion and financial improvements.