P.E.I. farmland prices almost double in 5 years

P.E.I. farmers are getting priced out of the market for new land, say farm groups, and poor enforcement of the Lands Protection Act may be part of the problem.

From 2018 to 2023 prices for farmland on P.E.I. rose 83 per cent, according to a report released by Statistics Canada late last month. It was the fastest increase in prices in the country.

At $6,432 per acre in 2023, prices were 30 per cent higher than the national average.

"It's difficult to invest, difficult to grow, especially for younger farmers," said Travis Cummiskey, youth district director on P.E.I. for the National Farmers Union.

While P.E.I. farmland prices are rising quickly, the province is still a deal for those coming from some parts of Canada, says Travis Cummiskey. (Submitted by Travis Cummiskey)

With higher prices to purchase land have come higher prices to rent it, Cummiskey said. Fields that might have been rented for $50 an acre a decade ago might now cost $100 or more, he said.

Younger farmers in particular may have a desire to cultivate more land, he said. As children grow older and take more of a role in farm operations, parents may look to expand their operations to increase revenues so the new generation can get paid.

"We are pricing our next generation of Island farmers out of the industry," said Donald Killorn, executive director of the P.E.I. Federation of Agriculture.

"We have to take steps as a province to ensure access for that next generation so that we continue to have an Island-owned agriculture industry."

'An increasingly scarce asset'

Many factors are working together to bring up land prices. Some of these are out of provincial government control.

"It extends beyond our province to across the country, across North America, around the world," Killorn said.

"Farmland has become an increasingly scarce asset. Institutions, governments, wealthy individuals have identified it as a very solid investment."

Farmland with a view could command even higher prices as a residential development. (Open Farm Day/Facebook)

Other provinces have seen companies whose main business is farmland investment buying up acreage.

That does not appear to be happening on P.E.I. yet, but Cummiskey said there have been individuals casting their eye toward the Island.

While farmland in Prince Edward Island is priced well above the national average, it is still far below the value in Ontario, where the average price is close to $20,000.

"P.E.I. is comparatively a deal," Cummiskey said.

"It's an attractive place for someone to set up a farm or buy land. You know, $6,500 an acre sounds like a deal when you're paying 15 or 20 [thousand dollars]."

Land-use plan needed

While the province can't control farmers from other parts of Canada with relatively deep pockets driving up demand for P.E.I. farmland, there are some factors the government can control, Cummiskey said.

In particular, he would like to see better enforcement of the Lands Protection Act, which limits the amount of land any person or corporation can control on P.E.I.

'We have not yet begun the hard work of consultation and discussion [on land use],' says Donald Killorn of the P.E.I. Federation of Agriculture. (Shane Hennessey/CBC)

"Large landholders have used multiple corporations to purchase land in excess of their land-holding limits under the Lands Protection Act. I definitely think this is a factor," Cummiskey said. "Interlocking companies has been the back door. It's in the act, but it's never really been enforced."

Enforcement of the land holdings rules was one of the recommendations of the Land Matters report. That report, released in July 2021, was a broad overview of land policies and laws in the province.

That fall, the province moved on some of the report's recommendations. Certain clauses in the Lands Protection Act were tidied up, including definitions of controlling and sharing land, and of principal residence.

The Island Regulatory and Appeals Commission was given expanded authority to investigate and audit land holdings. The results from those new powers, however, are unclear because nothing stemming from them has ever been made public.

'Bureaucratic purgatory'

Another recommendation, which the government has not yet implemented, is a provincewide land-use plan to ensure that agricultural land remains agricultural.

In unincorporated areas there is no zoning to preserve farmland as agricultural. Someone selling acreage with an eye toward residential development can bring six times the price a farmer might pay.

"In the rural areas, the one-acre lot, everybody seems to think that's a necessity. That's becoming more and more of an issue because we lose an acre every time somebody builds a house," Cummiskey said.

"We need some protection from that or we're going to see even more pressure."

The Land Matters report also recommended the province "immediately implement provincewide interim regulations to further regulate subdivision and development in areas without an official plan." This recommendation is listed by the provincial government as "underway."

P.E.I.'s Land Department says a state-of-the-Island report is due out in the next few weeks, and that will be an important step in developing a provincewide land-use plan.

Killorn would like to see the government move more quickly.

"The provincewide land-use plan is in bureaucratic purgatory," he said.

"It's one study after another and we have not yet begun the hard work of consultation and discussion of what that plan needs to look like."

The province anticipates that, following the release of the land-use report, those consultations will begin this fall or winter.