Canadian farmland values have reached record levels this year as demand has outpaced supply in most markets, says a report released Tuesday by RE/MAX.

But the report also said lower commodity prices are expected to temper appreciation in the coming months.

The RE/MAX Market Trends Report: Farm Edition 2013, highlighting trends and developments in 17 rural communities throughout Canada, found that limited inventory levels — reported in virtually all agricultural centres — continued to contribute to strong upward pressure on the price per acre in 88 per cent (15/17) of markets examined. Peak commodity values and low interest rates created the ideal climate for expansion over the past 12-month period, spurring unprecedented demand for farmland, said RE/MAX.

It said the price per acre in Central Alberta jumped from $2,000-$4,500 in 2012 to $3,400-$6,500 in 2013 while in Southern Alberta prices moved from $800-$6,500 last year to $800-$8,500 this year.

“The primary drivers in the market continue to be end-users — established farm operators expanding existing operations,” said Elton Ash, regional executive vice-president for RE/MAX of Western Canada. “Be it cashcropper or livestock farmer — the economies of scale continue to support expansion. There are many buyers waiting in the wings, but momentum is hampered to some extent by a shortage of farmland listings.

“Investors — both institutional and individual — are still active in Canadian agricultural centres, but their presence has subsided in recent months.”

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