Farmland is a hot commodity… in an industry of literal commodities.
But lately, there’s less of it to buy, and everyone and their brother is in the market.
Long-term trend: For 15 years prior to 2016, the U.S. lost or compromised 2K acres of farm or ranchland every day—bringing a whole new meaning to Y2K.
That trend led to 11M acres no longer being farmable.
If the same happens between 2016 and 2040, an area roughly the size of South Carolina will be flipped from farmland to commercial and residential development.
Soundbite: “Nearly half of the conversion will occur on the nation’s most productive, versatile, and resilient farmland,” said John Piotti, president of American Farmland Trust.
Farmland fuel: The ability to work from anywhere and high housing costs in metro areas could put the pedal to the metal on land lost to development.
And given that 40% of farmland in the U.S. is owned by folks over 65, in the next two decades, up to 370M acres of farmland are likely to change hands—or play into a developer’s hands.
Short-term sales: Land sale activity until the end of 2022 is expected to be high due to the red-hot farmland market.
Across the Midwest, farmland values are up 23% from a year ago, driven by:
- Rising grain prices
- Investor involvement in the market
- Borrowing strength and cash buyers
What now? Of particular concern is the impact of increasing farmland costs on beginning farmers.