Are farmland prices too high? Exploring the rent-to-price ratio and farmer perceptions

Abstract

Approximately 50% of the farmer respondents to the 2023 Ontario Farmland Value and Rental Value Survey (OFVRVS) indicate that farmland prices are “too high” relative to fundamentals. The survey also asks respondents about rent and price information for a familiar parcel of farmland. We use this information to construct a rent-to-price ratio and then apply regression analysis to data collected from the 2023 OFVRVS. We find that the respondents in the lowest quartile of the rent-to-price ratio are associated with a 17% increase in the probability of indicating farmland prices are “too high.”