The cost of farmland in Alberta has risen in recent years, increasing farm equity for established producers but creating barriers for those hoping to enter the industry, according to the CEO of Farming Smarter.
Ken Coles said a recent report from Farm Credit Canada tracks farmland values across the country, showing a general trend over 30 years that highlights a significant increase in land values.
“Alberta was pretty high up there, too, with irrigated land also very high,” Coles said.
He said the increase presents a double-edged sword for the agriculture sector. While higher land values boost the net worth of existing farmers, they also raise the cost of doing business and make it increasingly difficult for newcomers to break in.
“It costs more to buy land, and that can be a real challenge for any new farmers wanting to get into the market,” Coles said. “It increases the debt load required to do business.”
He said agriculture has long been a tight-margin industry, where profitability depends on controlling costs. With land, fertilizer and other inputs becoming more expensive, the financial threshold to start farming has climbed sharply.
“If you’re trying to get into agriculture and we’re dealing with land prices that are quite high, it’s almost impossible to get into it without some other equity that you’re building upon,” he said. “You can’t even get the loans big enough to buy one piece of land.”
As a result, he said many aspiring farmers are effectively shut out unless they inherit land, join a family operation or bring in wealth from outside the sector.
The rising value of farmland has also made it a strong long-term investment, but Coles noted those gains are largely unrealized unless land is sold — a move that can create its own complications.
“It’s been providing a significant return on investment,” he said. “But that doesn’t really help the person that needs that land for their business unless you sell it.”
Even then, selling farmland often requires reinvesting in other land, partly due to the tax implications of capital gains. For producers unable to buy, renting remains a key option, although that reflects shifting dynamics in the market.
“We have seen an increase in speculative investment companies buying land and renting them out,” Coles said. “If you can’t afford to buy the land, then renting is your best option.”
Renting can ease the burden of carrying large debt loads, particularly during periods of higher interest rates, but it also underscores the growing role of investors in farmland ownership.
Coles said one of the biggest drivers of land demand, particularly in southern Alberta, is the expansion of irrigation and high-value crops. He said the region is home to a large share of Canada’s irrigated farmland, and recent investments by governments and irrigation districts are expected to expand that footprint further.
Coles said Alberta’s growing potato sector is adding pressure to secure productive land.
“We’re now the largest potato producer in the country.”
“With a high-value crop like potatoes, there’s more people getting into it and that demand for irrigated land is there.”
He said the demand is also spilling over into nearby dryland areas, pushing up prices beyond irrigated parcels.
“If you want to keep your farm within a certain number of kilometres, then that non-irrigated land is probably going up a little bit artificially as well,” he said.
Coles said increasing competition for land, combined with rising costs, is reshaping the economics of farming in Alberta, benefiting established operations while making entry more difficult for the next generation.
