Farmland Scarcity and Rising Land Values Are Making It A Hot Investment Option

Determining the value of farmland can often be more complex than it is for other property types.

In addition to factoring in interest rates and various macroeconomic conditions, you also have to consider food demand, supply constraints and commodity prices to fully understand the value of farmland. 

Fortunately, these factors, including rising commodity prices, innovations in agricultural technology, an ever-growing demand for food, and a shrinking supply of arable farmland, are working together to help create positive headwinds for farmland – and driving up land values in the process.

Farmland Investor Demand is Hot

As a result, values in the U.S. have been steadily rising. For example, according to the U.S. Department of Agriculture, prices in the West and Pacific Northwest are blowing up. 

Irrigated cropland values in California averaged $16,300 per acre, the highest in the U.S. In 2021, Oregon farmland real estate values grew 10.3% year-over-year, and Washington cropland saw a 7.2% year-over-year increase in cash rent prices, contributing to a 20% rise in the region.

In the Midwest, Iowa farmland values increased by 28% on average, Indiana was up 23% year-over-year, and Illinois saw an 18% increase. 

Not surprisingly, investor demand for farmland remains hot, not just domestically but from foreign investors as well. As investor demand continues to increase, values should only continue to rise.The attraction for many investors is the potential access to two sources of returns: land value appreciation and farm operation income. These factors are why large investment groups like Vanguard Group and BlackRock Inc. BLK are heavy investors in Farmland Partners Inc. FPI and Gladstone Land Corp. LAND. Farmland Partners, an internationally managed real estate investment trust (REIT), owns more than 160,000 acres of farmland across the U.S. Gladstone, meanwhile, owns 169 farms in the U.S. with a total portfolio value of $1.5 billion.

FarmTogether’s Crowdfunding Option

Individual investors looking for an easier entry into farmland ownership can look to farmland investment manager, FarmTogether, as an option. Through their crowdfunding product, accredited investors can pool their money with other investors to leverage in institutional-quality agricultural opportunities across the US and reap the rewards of this historically stabilizing asset class

For as little as $15,000, qualified investors can browse and invest in various diverse geographies and commodities, ranging from hazelnut orchards in Oregon to corn farms in Nebraska. Last year, FarmTogether’s crowdfunding vehicle drove the closing of a record-breaking $22 million deal, Galaxy Organic Apple Orchard.

For investors seeking sole farm ownership and who can invest a minimum of $3 million in equity per farm, FarmTogether launched its Sole Ownership Bespoke product in 2020.

Its latest investment product, the FarmTogether Sustainable Farmland Fund, offers accredited investors diversified exposure across various properties in a single allocation. A perpetual offering, the fund offers an investment minimum of $100,000. The company has also partnered with leading individual retirement account (IRA) custodians to enable investors to purchase farmland using retirement funds. 

With farmland acquisition hot and prices continuing to rise, investment managers like FarmTogether continue to look for and identify ways to expand their products and offerings while providing a diverse range of innovative, flexible options to invest in this asset class.

For more information on FarmTogether, visit www.farmtogether.com.

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.

Featured photo by Markus Spiske on Unsplash