April 23, 2024

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US investors flock to farmland – news land

US investors flock to farmland – news land


news on the ground

It's 2:00 PM today – Niels van der Boom

Investment funds in the US are pouring record amounts of dollars into farmland. They are looking for stable investment opportunities and land opportunities. The value has doubled in less than ten years.

Among others, investment funds and private investors have invested a total of $16.6 billion in agricultural land through 2023, according to figures from NCREIF, an American organization that tracks statistics on real estate investments in the country. This equates to €15.3 billion. That's more than double compared to 2020, when investors held $7.4 billion in farmland, the FT writes.

Up to 3% in investor hands
The position of investors is significant when looking at dollars. It is different in absolute statistics. According to the USDA, between 1% and 3% of all U.S. farmland is now in their hands. More than 95% of the land is still owned by family businesses. The total US real estate market is valued at $3.4 trillion.

Investors who entered at the right time saw significant returns on their investment. In 2023, the average land price was $5,460 per acre (converted to €12,434 per hectare). It was half of 2006. So timely entrants significantly increased the value of their investment.

Agriculture is popular
Not surprisingly, investment funds in particular are pouring billions into the sector, according to investment experts. It is inflation-proofed, stable in value and returns are excellent. Everything is built on the scarcity of agricultural land, which is only increasing with the increasing population worldwide. Farmland is particularly popular in finance. In the US, wheat, corn and soy are grown there. Availability of water is also important.

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Since the 2008 financial crisis, funds have been busy diversifying their portfolios. It should be somewhat independent from the real estate market, which is subject to fluctuations. Agricultural land is not included. Private investors have also moved in that direction.

162 million hectares
Investment experts don't think farmland investment in the U.S. and Canada will slow down anytime soon. Like Europe, the agricultural sector is aging. The average American farmer is 58 years old. That means 162 million hectares of agricultural land could change hands in the next ten years. Investors are happy to respond.

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Niels van der Boom

Niels van der Boom is Senior Agriculture Editor at Boerenbusiness. He mainly reports on the potato market. He provides a potato market update every week.