Sask. farm real estate value continues skyrocketing — but what does it mean for farmers?

The value of Saskatchewan's farm real estate continues to skyrocket, growing by a record amount last year, data shows.

Experts suggest the trend is a promising sign for the long-term prosperity of Saskatchewan's agriculture industry. But higher property values are proving to be a barrier for farmers looking to expand their operation — or young farmers trying to launch their own.

"The world needs more of Saskatchewan, needs more Canada, when it comes to food production," said J.P. Gervais, chief economist for Farm Credit Canada.

"It's not without challenges, of course."

Statistics Canada recently released balance sheets of the agricultural sector, showing the state of affairs in each province since 1981. The dataset excluded the country's northern territories.

Total farm real estate in Saskatchewan — which is mainly driven by farmland, but also includes service buildings and homes — was valued at about $16 billion to $23 billion for more than a quarter century, data shows.

But real estate values have climbed steadily since 2008, data shows, rising from about $27.7 billion at the time to $114.3 billion last year.

The value rose by about $13.7 billion from 2021 to 2022 alone — a record year-over-year increase, data shows.

A similar phenomenon is playing out in the other provinces too, StatsCan data shows. Saskatchewan's growth started later than other provinces, but its farm real estate is the third-most valuable in Canada and the value is growing at similar pace as Alberta and Ontario.

Multiple factors, including basic economics, are contributing to the spike in property value, experts told CBC News.

There is high demand for food globally as populations increase, making farmland — a finite resource on which food can grow — more valuable, Gervais said.

Nearly 40 per cent of Canada's farmland is in Saskatchewan, according to the 2021 census of agriculture. Supply chain issues exacerbated by the COVID-19 pandemic, or caused by the war in Ukraine, have created ever greater demand for that farmland, Gervais said.

Technological advancements over the years have also made farms more efficient, generating higher profits, said Jason Dearborn, a fifth-generation farmer and the CEO of Dominion Blockchain Solutions, which he said has about 50 farm investors.

Dearborn believes farmland was undervalued for years, and said the greatest contributor to its increasing value has been the free market — an economic system without government intervention.