Page 9 - Farm and Food Policy Strategies for 2040 Series

Dickhut says that Farmers National deals in farmland from the Pacific Northwest to the Midwest
and Plains, Georgia and New York in the East, and elsewhere and “first,” he says, “there is not
that much land that comes up for sale.” Plus “farmers buy 70-80%, sometimes more, of the good
farmland that comes up for sale,” if sales for hunting and other recreational tracts are discounted.

Fevold, in Iowa, and Futch, in Florida, agree that farmers have long been the typical buyers and
say that won’t change quickly.

But, Dickhut also thinks the tide has begun to turn in recent years. He says farmers were
aggressive land buyers while farming was very profitable for most, up to about 2013. But in
recent years, especially in some sectors and in some regions, such as dairy farms in the North
and Northeast, he says, farmers are slower to jump at available land. “When things turned . . .
the fun went out of it,” and more farmers are retiring, not expanding their holdings, he
observes.

But now, “there is more interest by investment funds, like pension funds and venture capital
in buying farmland,” says Dickhut, at least in the states allowing such purchasing. That’s the
case in much of the country in the past several years, he says, with land prices easing up and
fewer farms competing for farmland.

While a few years of poor farm profitability can nudge farmers to the land market sidelines, he
said, “the investor buyers have the capital, because that’s their business . . . a pension fund or
whatever . . . so they can buy any time” that the long-term investment outlook is favorable for it.

Futch, in Florida, agrees. “It seems there are more of the institutional people than farmers
themselves out looking for farmland,” he says. “They’re buying farmland at an increased pace
than, say, 15 years ago. In the last five years it’s become more popular.”

Futch observes growth in recent years in “investment groups that specialize . . . are diversified
into many states and commodities, buying and leasing farms.” He works with one such group
“that has farms in 13 states – everything from cotton in Arkansas to blueberries in Georgia to
strawberry farms in Florida . . . even almonds in California.”

Most often, he says, “the investment buyers want leasebacks. They’ll go in and buy that farm,
but the only way they’ll buy it is if they have that farmer or another farmer lined up to lease it
back from them.” They don’t want to farm. “They are just looking for a return on
investment . . . something around 5%.”

Who are the institutional investors in farmland?

Institutional investors have diverse backgrounds and interests in farmland. For example, The
Teachers Insurance and Annuity Association (TIAA) closed a $3 billion farmland partnership
fund in 2015 following a 2012 farmland fund of $2 billion. TIAA’s farmland partnership fund,
Nuveen, invests in high quality farmland across four continents, including over 251,000 acres in
the U.S. and almost 739,000 acres in Brazil, according to their 2018 report. For farm locations,
see map below or click here.

www.Agri-Pulse.com 7