DENVER– Farmland values across the country climbed this year and hit record levels despite challenges like rising interest rates and extreme weather, according to recently released data from the federal government.
The United States Department of Agriculture (the “USDA”) found that U.S. farm real estate values, which includes all land and buildings on farms, increased 7.4% over the past year. Cropland values have grown 8.1% since 2022, its August 2023 Land Values report noted.
Nationwide value of farm real estate and cropland also increased sharply from 2021 to 2022, by 12.4% and 14.3% respectively, according to the USDA’s previous annual survey.
The Federal Reserve Bank of Chicago reported similar findings in its August 2023 AgLetter. Farmland values in the Bank’s district, including key farming areas in Illinois, Indiana, Iowa, Michigan, and Wisconsin, rose 9% in the second quarter of 2023 from a year earlier.
Additionally, the Federal Reserve Bank of Kansas City – covering Colorado, Kansas, Nebraska, Oklahoma, and Wyoming, as well as parts of Missouri and New Mexico – released a paper last week about farmland values. “Farm real estate markets remained resilient despite moderation in the farm economy and higher interest rates,” it noted. “The value of nonirrigated cropland increased from a year ago by an average of about 7% in all participating regions.”
Luca Fabbri, President and CEO of Farmland Partners Inc. (NYSE: FPI) (the “Company” or “FPI”), released the following statement about the new data:
“These studies and similar reports coming from farm country show that the farmland market is still strong and adding value. Appreciation is a key component of farmland investment returns, and its historical reliability is a big reason why we remain bullish about the asset class.
“Farmland does not typically see the peaks and valleys that mark economic changes. Instead, it usually experiences peaks and plateaus – appreciating at a high rate when times are good but not necessarily retreating when times are tough. Why? Because farmland is finite in supply and its value is founded on worldwide population growth, growing food demand, and yield-boosting innovation.
“Smooth out the peaks and plateaus, and you see that farmland grows in value by roughly 6% a year. Recent dispositions by the Company have concretely demonstrated the power of farmland appreciation.”
About Farmland Partners Inc.
Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of the date of this release, the Company owns and/or manages nearly 186,000 acres in 20 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina, Texas, and Virginia. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand. The Company has approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014. Additional information: www.farmlandpartners.com or (720) 452-3100.
