A study of Canadian farmland values found the average value of Canadian acreage increased 6.9 per cent during the second half of 2011.

Farm Credit Canada's semi-annual Farmland Values Report, released earlier this week, also found that the farmland values increased or remained stable in all provinces. Saskatchewan, which has 40 per cent of Canada's arable land, experienced the highest average increase at 10.1 per cent, followed by Ontario at 7.2 per cent.

The report looked at the country's agricultural land market between July 1 and Dec. 31, 2011. The 6.9 per cent increase in farmland values in Canada follows average increases of 7.4 and 2.1 per cent in the previous two reporting periods.

The full Farmland Values Report is available at http://www.fcc-fac.ca/en/Products/Property/FLV/Spring2012/index.asp.

Here's a brief look at the report findings, by province, from west to east:

British Columbia
Farmland values in British Columbia increased an average of 0.2 per cent during the second half of 2011. Values were unchanged in the first half of 2011.

The land market in the Peace River area saw a limited number of transactions, with prices remaining generally stable. However, there was a slight increase in values for the highest quality farmland in the Dawson Creek area.

The south Okanagan remained stable with good demand from fruit producers and part-time farmers. This reporting period also saw an increase in cross-sector land sales, including orchards and unplanted land acreages.?

Alberta
Farmland values in Alberta increased an average of 4.5 per cent during the second half of 2011. The province has seen values continue to rise since 1993.

Strong agricultural commodity prices, along with increased oilfield activity, appeared to spur confidence in the economy, with land prices either holding their value or increasing.

Farmland values in some areas of the Peace region and central Alberta have increased and were comparable to values observed in 2007 and 2008, before the 2009 drought. In southern Alberta, land was generally considered to be a sound investment.

Irrigated land suitable for specialty crops continued to be in high demand. Marginal land suitable for hay and cattle production also saw increases.

Saskatchewan
In the second half of 2011, farmland values in Saskatchewan increased an average of 10.1 per cent, the highest average increase across Canada, continuing the trend of price increases that began in 2002.

Farmland values increased by an average of 1.8 per cent per month in 2011. The results appear to mirror what's occurring in the United States, where double-digit increases in farmland values have been reported in several corn and soybean states. The ongoing strength of commodity prices, a land market that historically increased at a slower rate than in other areas of the country, good seeding and harvest conditions in most of the province and low interest rates combined to create the price increase.

Most areas of the province saw strong demand from local farmers wanting to expand their farms or purchase the land they were renting. New entrants from other provinces and countries also bid on land. Areas with oil and gas revenue have seen limited sales but strong demand.

Manitoba
Farmland values in Manitoba increased an average of 1.9 per cent during the second half of 2011, continuing the trend of rising farmland values that began in 2001.

This increase occurred despite excessively wet spring conditions that prevented the seeding of 2.9 million acres -- 30 per cent of the province's arable land. The hot, dry summer, however, helped create good harvest conditions in the fall, producing average yields.

The most significant increases were observed in grain farming areas.

Ontario
Farmland values in Ontario increased 7.2 per cent in the second half of 2011. The average monthly increase was 1.2 per cent in 2011, which is double the average monthly increase the province recorded in 2010. Farmland values in Ontario have been rising since 1993.

Southwestern and eastern Ontario posted the most notable gains in land values, while regions in the rest of the province saw more modest changes. In several areas, demand for farmland significantly outweighed the supply as intensive livestock, crop and vegetable producers all wanted land.

Quebec
Quebec farmland values increased an average of 4.3 per cent in the second half of 2011. Quebec is the only province that has not experienced a decrease in its average farmland values since 1984.

During this reporting period, demand for farmland remained strong and increases were observed across the province. Land value increases were observed in the cash crop sector. Land transactions were also noted among dairy and poultry producers during this reporting period. Grain prices, strong demand and low interest rates factored into the increases.

New Brunswick
New Brunswick farmland values increased an average of 1.3 per cent during the second half of 2011. Values have increased or remained static in New Brunswick since reaching a peak increase of 6.3 per cent in the last half of 2008.

The Carleton area saw decreased demand, but steady values as producers faced higher input costs, leaving them with less disposable income to purchase land.

In the Madawaska-Victoria area, potato production commanded the majority of sales, with no change in land values.

In the Sussex area, many large acreages were purchased for rural residential purposes and hobby farming.

Nova Scotia
Nova Scotia farmland values increased an average of 3.2 per cent in the second half of 2011. Since 2001, farmland values in Nova Scotia have remained stable or have increased.

A limited quantity of farmland was available for purchase throughout the province.

Farmland in the Antigonish area commanded generally high prices, as rough highland terrain limits the quantity of workable farmland. In the Kentville area, farmland prices continued to rise, spurred by demand and competition among cash crop farmers, vineyards, dairy producers, poultry producers and small fruit growers for good quality land parcels. The strong feather industry helped keep land values high.

Prince Edward Island
Prince Edward Island farmland values increased an average of 1.5 per cent in the second half of 2011. Values have remained stable or increased in P.E.I. since the last half of 2009.

Sales throughout the province showed a general increase in both demand and price for good quality farmland. This may reflect a general optimism by potato farmers who experienced a second consecutive year of good harvest, coupled with higher crop prices.

Newfoundland and Labrador
Newfoundland and Labrador farmland values remained unchanged during the second half of 2011, where farmland values have remained stable or increased since 1993.

Due to the lack of available sales, no change was observed during this reporting period.