A study of factors associated with land values in the proposed South Saskatchewan River Development
Warren, Douglas Milton
The price paid for land has an important bearing on the financial progress achieved by farm operators over a farming period in its effect on the capital position of the operator. The original outlay for land largely regulates the speed of development of the farm and the degree of efficiency which can be maintained in farming operations. Where prices are excessive, development is considerably slower than where prices are at levels that may be considered more "acceptable." Acquisition of equipment and other working capital to reach efficient levels of operation is delayed. The normal consequence of these processes is a slowing down of subsequent expansion reflected in a lesser rate of financial progress over the operator's lifetime, and a lower level of living, which often is attended by resultant losses to the community as a whole. Where the earning power of the land is forced in an effort to meet heavy purchase payments, there is the danger that the farmer will resort to farming practices which may be contrary to good conservation, with resultant loss of soil fertility, further reducing the earning power of the land. Such losses are not only felt by the farmer, but by the community as a whole, when a series of serious drought years, such as witnessed in the Province of Saskatchewan in the depressed period known as the "hungry thirties," was accompanied by severe drifting of soil. Such conditions become cumulative and recovery from the effects of soil depletion and other deterioration becomes almost irrecoverable with severely depressing effects when extended over a period of time. Effects of excessive land prices in this regard are in evidence in the form of serious instability of ownership and depletion of soil and farm capital beyond the point at which recovery is possilble. In view ot the effects of inappropriate land values, there is reason to consider suitable processes which will tend to promote land values at levels that can be financed on the basis of the earning power of the land. The concept of an appropriate value level would make allowance for reasonable economic progress and an attractice standard of living for the farmer. A special problem with regard to the appropriateness of land purchase values arises in connection with irrigation development. Such development normally involves high land values arising out of the cost of developing the irrigation system. At the same time the process ot irrigation development usually involves a lengthy development period in which the earning power of farms remains below its mature potential. In turn, anticipations of high returns from irrigation tend to promote speculative demands for land which exert additional upward pressure on values .As against these forces promoting high prices for irrigation lands, the high capital requirements of irrigation farming involve an additional need for retaining sufficient income for favourable farm development. The irrigation farmer, therefore, is normally faced with even more harmful effects from excessive land values than those which often confront the dryland operator. The above features have focussed attention on the need for considering more carefully the basis of land values which is established for irrigation operators in the process of developing an irrigation area. This study is concerned with land values in the area of the proposed South Saskatchewan River Development as they may relate to the process of establishing suitable levels of land values in the process of developing the area. Specifically, it considers the position of land administration for the area. Its objective is to furnish an analysis of existing dryland values in terms of the pattern of values and the factors associated with values, which may guide selection of suitable standards of dryland values for the area.