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Who's Buying The Land
When farmland comes up for sale, the buyers are historically 65% expanding farmers, and 35% investors. But those numbers have flip-flopped over the past year.
Chuck Wingert is with the Realtor’s Land Institute in Minnesota. He says in 2017, there was an unusually high number of investors back in the market. They sold about 60 farms last year, and 60-percent were investors.
"The last four years they’ve only attributed about 20% of the purchases and in normal times they’re about 35%. So, what they’re telling us is they feel the market’s either dropped far enough or is at the bottom that they’re back in the market," he says. "Whether they’re coming out of stocks with these high values and want to put it in something safe, and others cite that they feel we’re going to have inflation and land’s just an ultra-safe place to be going forward."
Wingert says Minnesota and a few other states don’t allow foreign investors or pension fund investors. However, because of the increasing world demand for food, they are seeing more foreign people buying land in other parts of the country.
Commodity prices are low so farmers might sell some of their acres to raise money, which would bring more land on the market. But this is an interesting time.
"Average farmers still have very low debt levels. Banks have been very conservative in their lending so we aren’t seeing a lot of foreclosures because a lot of farmers saw what happened in the 80’s when high interest rates ate them up," says Wingert. "We still have ultra-low interest rates, but, we’ve got a big crop again. You have options if you have crop in the bin. A big price with nothing to sell doesn’t feel good, so there’s at least options."
Learn more about who's investing in U.S. farmland