Investing in Permanent Crop Farmland

The advantages and risks to your farming operation are largely dependent on the crops that you decide to grow.

Permanent crops—also known as “perennials”—are a category of agricultural products that have grown in popularity over the past few decades. As more consumers embrace healthier lifestyles, perennials like citrus and nuts have seen an increase in retail sales and demand.

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The Fundamentals of Farmland Ownership

Is rural real estate a good investment?

The volatile economic climate of 2020 has many farmers, ranchers, and landowners looking to secure their financial portfolio with low-risk investments rather than gambling collateral on high-risk stakes. Through COVID-19, rural real estate has consistently stood out as an outlier compared to the ups and downs of commercial, residential, and stock market investments.

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Farmers Less Expected to Sell Land

A major agricultural shift has recently surfaced; this shift, being that farmers have become less likely to sell their land than they were even a few years ago. This is a surprising shift given that farmers are being offered record prices for their land.

Over the last few decades, farmland has been escaping the hands of farmers and landing into the hands of developers. As farmers have retired, a younger generation of farmers has not stepped in to fulfill farming production leaving a large amount of farmland at the disposal of developers.

Because the value of land has increased astronomically, farmland has become a developer-dominated market. Record land prices and low commodity prices enticed farmers to sell. In many cases there was an urgency to cash in while they could.

This shift resulted in many states enacting farmland protection laws, allowing the state agricultural departments to entice farmers and ranchers with a large chunk of change in exchange for securing their land into agricultural easements, thus warding off urban and suburban development on treasured farmland.

Recently farmers have become less tempted to hand their land over to developers. Many have turned down major lucrative offers. Why? Perhaps it’s the major surge in profits earned by growing commodities (corn, for example), the high profits available to farmers by renting or leasing their farmland to new farmers, and/or the emotional connections to the land.

It’s possible that this shift is only transient (perhaps resulting from the recent spike in commodity prices). Even so, it represents a temporary and positive shift in the agricultural market.

If you are in need of funding as an alternative to selling off your land to developers, AgAmerica Lending can help with an agricultural loan or a short term Ag bridge loan so that you can take advantage of growing commodity prices.

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