Around 40% of all cultivated farmland in Canada is rented, but how do you know if renting or buying is the most cost-effective choice?
Farm Credit Canada(FCC) recently released a report called Understanding Canadian farmland rental rates: FCC analysis, which helps break down the rent-to-price ratio.
FCC Chief Economist, JP Gervais, says there is a lot of different info that goes into the report, but the purpose of the report itself is quite simple.
"The purpose of this was to look at, if you compare land rental rates, compared to land values, is one going up faster than the other."
In Manitoba, the rent-to-price ratio dropped from 2.5% to 2.4% last year, while other Prairie provinces say an increase in that same ratio, but what does that mean for Manitobans?
"In some sense, to have a ratio that's been declining in Manitoba means that you're a little bit better off if you're looking at renting land, but the difference is not that significant," says Gervais, "You just have to crunch the numbers to understand, what are the best options for me."
He says there are so many different variables that need to go into that decision, and it'll be different for everyone.
"I wish I could just lay out a simple formula, but the reality is you just have to sit down with somebody, a farm management expert, a financial advisor, to just really make sure that you crunch all the numbers and come up with the best strategy for your farm."
Ultimately, Gervais says this report is a good tool for farmers to use when making these decisions.
