As much as the era of the family farm feels like a distant memory, you still might be surprised by how few farms are outside the control of corporations. Presently, close to one-third of U.S. farmland is owned by outside investors who lease it to farmers. Rising land prices partly explain the trend toward this outsourced ownership. For instance, an acre of Iowa cornfield would set you back about $419 in 1970. By 2016, that same parcel would cost about $7,183 — an increase of over 1,600 percent.
Investors have noticed the rising value of farmland, and their eagerness to snatch up acreage has only made the problem worse. The Economist reports that farmland has outperformed most asset classes for the past 20 years, providing an average of 12 percent annual returns. Investors are increasingly bidding on productive property to balance out their portfolios, and with an estimated 10 million acres of farmland expected to come up for sale within the next five years, the phenomenon will only grow.
While this might be good news for those with land to sell, it’s creating a bigger barrier to entry for future farmers, many of whom lack access to affordable acreage. Likewise, there are drawbacks from a sustainability standpoint. Financial advisers can dictate what’s grown on the land they own, and most favor conventional methods that lead to environmental problems. Despite these obstacles for the next generation of U.S. farmers, there are resources, such as the National Young Farmers Coalition’s land access resources, meant to help circumvent the pattern of investors acquiring retiring farmers’ land. Visit the NYFC Land Access page to find information about farmland and farmer services near you.
