Farmland Agricultural Investing: Latest Trends

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Investing in farmland, seems like it couldn’t be simpler, right? Let the investment professionals at KerNors take you through three articles that show how many factors can impact your investing.

Republicans And Democrats Introduce New Bill To Aid Beginning Farmers

The benignly titled Beginning Farmer and Rancher Opportunity Act is actually an important piece of bipartisan legislation that tries to draw young people to farming through everything from training programs to land and lines of credit.

With the average age of the American farmer now at 57, bill co-sponsor Rep. Tim Walz (D-Minn) acknowledges that:

"we must provide our youth with the training and tools they need to seize opportunity and take up farms of their own.” He adds that it’s critical “that the next generation of American farmers is able to provide the world with a safe, abundant supply of food."

National Young Farmers Coalition - Republicans And Democrats Introduce New Bill To Aid Beginning Farmers

Is A Farmland Bubble Forming?

While no one could disagree that farmland has been hot, some wonder if the bubble could burst. With prices even in drought-stricken areas nearly twice what they were five years ago, there’s no denying money is being made though.

As institutional investors chase the largesse, concerns are that smaller, often younger farmers are being squeezed out—frequently because of a lack of capital. (See previous article.) Author Wayne Grohl sees everything from government ethanol mandates to drought to tight credit being to blame, saying:

"With land acting as security on most loans to farmers for equipment, and a persistent credit crunch facing farmers quarter after quarter, signs are piling up that the value of mortgaged food-producing land is headed for a slip."

The Source | National Association of Realtors - Is A Farmland Bubble Forming?

Institutional Investors Grow Influence on U.S. Farmland – Report

Farmland has become big business. A study by the Oakland Institute claims that institutional investors have a $10B war chest to invest in farmland; moreover, that 400 million acres of farmland is expected to turn over in the next twenty years (in many cases due to the aging of the current generation of farmers—noted in our first article).

In their article, Reuters also noted that the report pointed to far more “hands-on” involvement than one might expect, saying that investors often have influence that:

"alters decisions about which crops to plant, land management and labor practices"

Reuters - Institutional Investors Grow Influence on U.S. Farmland – Report

Farmland can be an excellent investment. We know; we started with agricultural investments in 1924. But, in this series of articles, you can see how so many factors can impact values. Trust the expert advice from KerNors Capital Group. Call us today.

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