Farmland prices holding steady despite falling crop values
The Globe and Mail
Published Tuesday, Sep. 30 2014, 5:00 AM EDT
Last updated Monday, Sep. 29 2014, 7:00 PM EDT
The value of agricultural land across Canada is generally holding up despite falling crop prices, regional flooding and a long winter that kept buyers at bay, a new report shows.
However, the study from real estate company Re/Max adds that price increases for most farmland are expected to slow this year, with the exception of Alberta, southwestern Ontario and parts of the Ottawa Valley.
In Alberta, bidding wars have helped drive up the price of farmland by as much as 20 per cent year over year to around $10,000 an acre in the southern part of the province. Even unproductive scrubland rose in value as city dwellers bought rural getaways.
“Western Canadian farmers and their families continue to display resilience, surefootedness and enduring optimism,” said Elton Ash, regional vice-president at Re/Max of Western Canada. “Intense demand and short supply in Alberta has caused bidding wars like we see in Canada’s hot housing markets.”
The picture was not as bright in Saskatchewan and Manitoba, where flooding and a harsh winter hurt farm profits and kept per-acre values generally flat year over year. In Saskatchewan, prices increased from between $1,500 and $2,000 an acre in 2013 to between $1,800 and $2,200 in 2014. Manitoba saw its price range go from between $1,350 and $1,600 to $1,500 and $2,000.
The report said the most typical buyer of farmland anywhere was a farm family expanding their output by buying more land. Proximity to local processing facilities was also a big factor in purchases.
In Ontario, farmland north of the Greater Toronto Area slated for redevelopment has hit $54,000 an acre, double the value of producing land in the region. The southwest tip of the province, Chatham-Kent, saw prices increase by 40 per cent from 2013 to $25,000 an acre. The rise drove some families looking to expand their farms out of the region to find more affordable land, the report said.
In Ontario’s Kitchener-Waterloo area, the bulk of the buyers were wealthy city folk looking to start a hobby farm. These farms ranged in size from 15 to 50 acres and typically cost just under $1-million, slightly lower year over year. Farmers in this area are also having to go further afield to find affordable land to expand their operations.
British Columbia’s blueberry-growing region, the Fraser Valley outside Vancouver, is also drawing a lot of interest from buyers. In the wake of a good blueberry crop in 2014, prices for an acre of farmland rose modestly to as high of $63,000 an acre from $60,000 in 2013.
In Nova Scotia, a number of new vineyards help send up prices 25 per cent to as much as $10,000 an acre.
Uralkali Announces Senior Management Change
Uralkali (LSE: URKA; the Company), one of the world’s largest potash producers, announces that Viktor Belyakov has resigned from his position as Chief Financial Officer of the Company.
Anton Vishanenko will act as the interim CFO until the next Board of Directors meeting scheduled for the end of October when the Board will consider his appointment as the permanent CFO. Viktor Belyakov will advise the interim CFO in order to ensure an effective and smooth transition of responsibilities.
Anton Vishanenko has extensive financial experience in the role of Chief Financial Officer at several major Russian companies, including Mechel, UralChem and Novorossiysk Commercial Sea Port. He holds an Executive MBA from INSEAD, and is a member of ACCA and CPA.
Dmitry Osipov, Uralkali CEO, commented: “In his 12 years at Uralkali, Viktor Belyakov has played an instrumental role in the Company’s continued growth. He helped steer the business through key milestones, including Uralkali’s IPO in 2007, the transformative merger with Silvinit in 2011 and the subsequent integration. He also capably led the Company as acting CEO during September-December 2013. We are grateful to Viktor for his excellent work and wish him the very best in his future endeavours”.
Uralkali (www.uralkali.com) is one of the world’s largest potash producers and exporters. The Company’s assets consist of 5 mines and 7 ore-treatment mills situated in the towns of Berezniki and Solikamsk (Perm Region, Russia). Uralkali employs ca.11,300 people (in the main production unit). Uralkali’s shares and GDRs are traded on the Moscow Exchange and London Stock Exchange, respectively.
Miners victim of their own ‘over-promotion’
- by:PAUL GARVEY
- From: The Australian
- September 29, 2014 12:00AM
RESOURCES companies should blame themselves and their history of over-promotion, rather than cooling commodity prices, for the steep downturn in mining stocks.
That’s the view of Bert Koth, the managing director in Australia for the $US7.9 billion-plus ($9bn) Denham Capital private equity group, who believes it will be some time before investors are again prepared to back the resources sector with the same gusto seen over much of the past decade.
Australia’s resources indices have fallen by almost 40 per cent since peaking in 2011 and equity funding in the sector has dried up, leaving smaller explorers battling to survive.
Speaking to The Australian, Mr Koth said blaming the funding crisis on falling commodity prices ignored the mistakes the industry had made during the boom.
“It’s not because China is growing a little bit slower, it’s not because there was or is a debt crisis in the US and Europe, to a significant degree it’s because the industry was over-promoted,” Mr Koth said. “When you set inflated expectations and they don’t come to fruition, people abandon the sector.”
Studies by Denham found that an investor backing every single initial public offering in the resources sector over the past five years would have lost more than 60 per cent of their money.
“In a city like Perth, where there’s a lot of punters, their portfolios are down 70 per cent. If you lose 70 per cent of your money on something, how long does it take before you invest again in the same thing with the same people? It might take a while.”
The continued plunge in the iron ore price this year meant the resources sector was at an “inflection point”, he said, where listed companies that were low on cash may finally go under.
“Everyone was hinging on the belief that in six months everything would be better. But with iron ore price forecasts down to $US70 to $US75 (a tonne), it’s going to depress the whole market confidence even further and undermine any residual optimism in the system,” he said.
The current malaise in the resources sector was likely to prevail for some time as demand gradually caught up with supply.
Mr Koth noted that about 95 per cent of new copper and iron ore supply on the drawing board around the world came from projects with a forecast capital expenditure of more than $1bn.
Around half of those $1bn-plus projects were in the hands of junior to mid-tier companies with little likelihood of securing funding, while the mining giants owning the balance would be very cautious about putting more money into new projects.
“Macroeconomically that’s going to mean eventually demand will meet supply,” Mr Koth said. “That’s not going to happen tomorrow, and I’d argue you’re talking multiple years rather than multiple months. So, I don’t see any swift recovery.”
The upside of a prolonged downturn in the resources sector would be some relief in operating and capital expenditure pressures across the industry.
Mr Koth said that of the more than 500 mining projects that Denham had looked at in recent years, only “a handful” made financial sense. He said there were opportunities for companies to reduce their cost bases in the current climate by addressing overstaffing, renegotiating rates with mining contractors and taking advantage of the new-found availability of geological staff. “Industry-wide I think there’s at least a 10 per cent opex and 20 per cent capex reduction potential in Australia,” he said.