Economists are saying a of demographic, financial, and international agricultural trends have pushed the price of farmland sky high鈥攁nd investors are taking notice.
examined data from the Department of Agriculture's 2022 to see which states recorded the most significant growth in farmland prices from 2018 to 2022. Prices are shown as the dollar amount per acre. The report excluded data from Alaska and Hawaii, and also excluded Native American reservation land in Arizona, Nevada, New Mexico, and Utah.
Federal Reserve Bank policy advisor David Oppedahl observed in November 2022 that rising interest rates were on rising farmland prices in the northern plains states he oversaw, including Illinois and Michigan.
"Farmland values overall saw a 20% increase from a year ago, with some states' farmland values rising more rapidly than other states," Oppedahl said.
A farm is any establishment that sold $1,000 or more of agricultural products, including , in a year. A farm's real estate value was determined by calculating the value of all land and buildings on a property that could be sold in current market conditions.
Much like the rest of the commodity-producing world, the in the U.S. has been rocked by both the Russian invasion of Ukraine and supply chain shocks related to the COVID-19 pandemic. International food shortages have meant higher prices for products like corn and grain.
From 2017 to 2020, the value of farmland remained more or less stagnant. But in the summer of 2020, governments around the country began lifting pandemic restrictions on people, businesses, and civilians, sparking growth.
By 2022, the average price of an acre of farmland per acre in the U.S. was $3,800, 22.6% higher than in 2018. It's the latest form of real estate to see values shoot to record levels, pricing out some would-be entrants into the farming industry. That prospect doesn't seem to be stopping Wall Street types, including billionaire Microsoft founder , from snapping up more crop-ready American heartland.
