America Is Losing Farmers as Private Investors Scoop Up Land

Guest Post by Ben Felder, Investigate Midwest

Even though cash-buyers, including investment firms, rent the land to farmers, critics say that creates a system that lacks stability for farmers and ranchers, especially those looking to start a business for the first time.

As Jess Bray pulled up to a 21-acre farm nestled in an eastern Oklahoma valley, she instantly got a warm feeling. “This is the place,” she thought.

After attempting to buy two other properties before being outbid by cash buyers, Bray and her husband Jon began to wonder whether their dream of owning and operating their own farm would become a reality.

“We always wanted to farm, but we aren’t trust fund kids, we didn’t grow up in agriculture … we didn’t have a farm handed down to us, so it wasn’t something that was very accessible to us,” Bray said. “This was a dream come true … but it wasn’t without challenges.”

In 2022, Bray, then 39, purchased the valley property, which they now operate under the name Blue Mountain Farm, growing a variety of vegetables, and raising pigs and a dairy cow near the town of McCurtin.

While Bray eventually realized her dream, the rising cost of farmland has priced out many other would-be farmers and ranchers or forced others into early retirement.

The parts of the country where farmland prices have seen the largest increase have also been where the number of agriculture producers has declined the most.

From 2017 to 2022, the average value per acre of all American farmland grew from $4,368 to $5,354, an increase of nearly 23%, according to U.S. Department of Agriculture (USDA) data on the market value of farmland and its buildings.

But in the 409 counties across the country that saw a producer decline of 15% or greater over the past five years, average farmland values increased by 31%, according to Investigate Midwest’s analysis of USDA reports, land value records and other property data.

In reviewing property records and speaking with more than a dozen officials who closely track farmland values, Investigate Midwest found there are multiple causes for the decline in producers in counties that saw the most significant increase in value:

• Population growth expanding into rural communities has increased prices and reduced farmland as 11 million acres of agricultural land were converted into residential properties from 2001 to 2016, according to the American Farmland Trust.
• The push towards wind and solar energy, often backed by government subsidies, has also raised land rents much higher than for traditional agricultural use.
• Large investment firms, such as Farmland Partners, PGIM and Gladstone Land, are paying top dollar for land and reselling some property at amounts as much as five times higher than the regional average.
• The move towards industrial farms has also meant more corporate land buyers who can pay cash and beat many local offers.

“The biggest competition (for farmland) used to be from the person who wanted a hobby farm but maybe wasn’t farming full time,” said Vanessa Garcia Polanco, a policy campaign director with the National Young Farmers Coalition. “Today, the biggest threat we see is from corporations and hedge funds.”

The increase in competition for farmland has been especially detrimental for young and would-be farmers. According to a 2022 National Young Farmers Coalition survey,​​ 59% of farmers under 40 said finding affordable land was “very or extremely challenging.”

Farmland ownership has received increased attention from lawmakers in recent years, especially concerning foreign-owned companies. Lawmakers in dozens of states have pushed laws limiting foreign land ownership, including from countries like Iran and China, often claiming these buyers drive up costs that push out family farms.

However, U.S. Agriculture Secretary Tom Vilsack recently called that focus misguided and said the growth in American investment firms buying farmland is a more pressing concern.

“Do you know roughly a third of all the farming operations that generate more than $500,000 in sales are owned by investment outfits? Are you concerned about Wall Street owning farmland?” Vilsack said in response to a question about foreign-owned land while speaking at the North American Agricultural Journalists conference in April.

But Paul Pittman, the executive chairman of the investment firm Farmland Partners, said companies like his were not to blame for rising prices and were keeping many farms in production.

“That’s populist B.S. and nothing less,” Pittman told Investigate Midwest when asked about Vilsack’s comments. “And remember, for every farmer who is whining about being outbid, there’s a farm family that owned that farm for 100 years and deserves to get the highest price possible.”

Investment firms significantly increase farmland holdings

In the spring of 2023, the Farmland Partners investment firm spent $8.85 million in cash on 1,840 acres of farmland in Haskell County, Oklahoma.

The land was a highly productive swath of soybean, corn and wheat fields with an irrigation system pulling water from the nearby Canadian River.

The Denver-based firm had grown in recent years to become the nation’s largest farmland investor, with a valuation of more than half a billion dollars and a portfolio of more than 180,000 acres across the country.

One of the firm’s land buys in Oklahoma was a 174-acre property for $3 million. At $17,232 an acre, the Oklahoma purchase was five times more than the median for comp sales in the area, based on data from the land value tracking site AcreValue.

However, the firm had shown that its high purchase prices were likely to pay off. It had recently sold nearly 2,500 acres of farmland in central Nebraska and South Carolina for a combined $16.2 million, a transaction that netted Farmland Partners a 24% return on investment, the company announced.

According to data from the National Council of Real Estate Investment Fiduciaries, investment firms increased their farmland holdings by 231% from 2008 to 2023.

While traditional real estate property is constantly expanding, many investors see the decrease in available farmland as a partial driver of its value.

Most farmland investment firms lease the land back to producers who operate the entire farming business. In a recent SEC filing, Gladstone Land, which owns 111,836 acres of farmland across 15 states, said it rents most of its land to farmers on a “triple-net basis,” which means the tenant pays the related taxes, insurance costs, maintenance, and other operating costs in addition to rent.

However, Pittman, the chairman of Farmland Partners’ board of directors, said there are signs that more farmers are struggling to afford rents.

“There’s a little more trouble out there than there was 12 months ago … and we’re seeing it in having an occasional farmer come to us and say, ‘Hey, can you re-rent this farm to someone else?’” Pittman said on a May 1 investor call, according to a transcript.

“When we’ve had that occur, we’ve been able to (re-rent) the farms at the same price or in some cases, a little bit higher.”

Asked about Vilsack’s comments, Pittman said declining commodity prices are pinching some farmers.

“Starting in about 2019, commodity prices started to go up pretty fast, but here we are in 2024, and commodity prices have pulled back,” Pittman told Investigate Midwest. “This is a low margin business … so when you see a little bit of a drop in commodity price, it can challenge (a farmer) financially.”

However, Pittman said his firm’s investments remain solid because, in the agriculture sector, “bankruptcies are minuscule.” The 2022 farm bankruptcy rate was 0.84 per 10,000 farms, its lowest rate in nearly 20 years.

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