In October 2024, a sale of 41,554 acres of farmland across a portfolio of 46 farms was sold by Farmland Partners Inc. to Farmland Reserve, Inc., an entity of The Church of Jesus Christ of Latter-day Saints, for $289 million.

## Who Is Farmland Partners?

Farmland Partners Inc. is an internally managed real estate company that owns more than 140,000 acres of farmland across 15 states and makes loans to farmers secured by farm real estate. The company went public in 2014 and has since purchased more than 300 farms through various transactions with other investors, landlords, and farmers.

## Farmland Details

Paul Pittman, the executive chairman for Farmland Partners Inc., said the recent sale included multiple tracts of land across eight states, including Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma, North Carolina, and South Carolina. The acres sold were predominantly grain farms, as well as soybean and cotton farms.

When asked how this sale might impact local farmers, Pittman said the sale helps bring “another high-quality investor in the local region.” While there are concerns about the sale’s impact on local communities, Pittman assured that the sale doesn’t change things locally in a meaningful way as Farmland Reserve has committed to maintaining the same farmer tenants on the land.

Additionally, Farmland Reserve was chosen as the investor to sell to because of their reputation as excellent long-term land stewards. Farmland Partners have also owned many of the tracts they sold for nearly 10 years, emphasizing that they are not land flippers.

## Local Farmers Get First Right of Refusal

While the current tenants were offered the opportunity to purchase the land prior to the sale with Farmland Reserve, due to their contracts’ right-of-first-refusal clause, none elected to take Farmland Partners up on the offer.

## Federal Laws Restrict Farmland Partners’ Ability to Make Multiple Sales

The sale was managed as one larger sale due to federal laws that limit Farmland Partners to selling no more than seven properties in one calendar year. This creates challenges for the company when it comes to selling tracts of land to individual farmers.

## Tenant Reaction

Despite the change in land ownership, Farmland Reserve met and interviewed all the farmer tenants on the sold land before the sale. The farmer tenants were aware of the transaction and supported it.

## Economic Valuation of Farmland Sale

At $289 million for 41,554 acres, Farmland Reserve purchased the farmland at an estimated valuation of $6,954.81 per acre, which was more or less at market value. The majority of the farmland involved in the transaction was cropland that included grain farms, corn, soybean, rice, and cotton farms.

According to the USDA Land Values 2024 Summary report, the U.S. cropland value averaged $5,570 per acre for 2024, with varying values across the eight states involved in the sale.

Rabail Chandio, an assistant professor in the department of economics at Iowa State University, noted that the purchase of farmland by Farmland Reserve doesn’t necessarily indicate a trend of farmland being bought by investors.

The Impact of Investors on Farmland Values

There’s always a fraction of sales that are accounted for by investors,” Chandio said, “and something like this comes up every now and again.” A general trend that has been occurring for the past decade, though, is the purchase of farmland by retired farmers who are sometimes local or out-of-state, Chandio said. These retired farmers will still be classified as investors, she said.

While sales of this nature can sometimes have some implications for farmland values, Chandio said that’s only the case if it becomes more common. “Given how infrequent these are,” she said, “they don’t have an impact on the farmland values.”

Factors Affecting Farmland Values

Factors that are impacting the upward trend in farmland values are nationwide interest rates, net farm income and commodity prices, economic uncertainty, and land supply, Chandio said. While interest rates have begun decreasing, Chandio said it takes about a year for changing interest rates to impact farmland values. “So far, we’re just absorbing the effects of the aggressive interest rate hikes.”

Chandio said the fact that land remains in limited supply and the demand for land remains consistent, “the supply ensures that we are moving in an upward trajectory” as far as the farmland values are concerned.

Overall, while investors play a role in the farmland market, their impact is limited compared to other factors such as interest rates and land supply. The stability of the farmland market will continue to be influenced by a variety of economic and agricultural factors, making it essential for farmers and investors alike to stay informed and adapt to changing conditions.