Statistics show that around 40 per cent of Canadian farmland is rented. 

Farm Credit Canada has released a report that could help producers make decisions about buying versus renting land.

FCC's rent-to-price ratio for cultivated land looks at cash rental rates and crosses that information with the Farmland Values Report data. 

A ratio trending lower suggests that cash rental rates are appreciating at a slower pace than land values, while an increas indicates that rental rates are increasing faster than land values. 
The national rent-to-price (RP) ratio in 2022 was 2.55 per cent, compared to 2.5 per cent in 2021 

According to the rent-to-price ratio for the prairies Saskatchewan saw a slight increase to 3.1 per cent from 3 per cent in 2021, Alberta's increase was 2.6 per cent up from 2.2 per cent, while Manitoba's RP ratio was down to 2.4 per cent from 2.5 per cent reported in 2021. 

All other provinces saw a decrease other than BC where not enough lease data was collected.

The report points out that typically renting is less expensive than purchasing and the lower the ratio, the better the renting option becomes. For young farmers and new entrants, renting is seen as a viable option to free up capital that would otherwise be tied up in purchasing and instead can be put towards financing options for other needs like machinery or inputs.

Another important consideration when deciding whether to buy or rent is understanding the relationship between rental rates and cropland revenues. Rental rates as a proportion of crop gross revenues have declined since 2020, but crop input costs have increased significantly, putting pressure on profitability.

FCC’s chief economist J.P. Gervais says there are several economic conditions that impact the cost of renting land in Canada like land values, the availability of land, and its quality.

He says deciding whether to buy or rent is a strategic decision unique to each producer.

"There is a lot to consider, including interest rates, yields, commodity prices, and input costs. Open communication and collaboration between landowners and renters creates a quality, long-term relationship. Matched with a risk management plan and business strategy, producers have the building blocks for success."