#528
Land And Expand
Published:
Feb 24, 2024
Author:
Sarah Parsons Wolter
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Wealthy tech entrepreneurs and investors are buying farmland in the US, as are institutional fund managers. Bill Gates owns over 240,000 acres, making him the largest private owner of farmland in the US. Investment groups including PGIM and TIAA have been buying land after the ‘08 crisis as an asset diversification play. A combination of rising interest rates, Ukraine’s (a large exporter of grain) ongoing war and supply chain disruptions during the COVID pandemic has also made farmland more attractive in recent years.
The average value of US cropland has grown from $1.2K per acre in 1997 to over $5K in 2023, and the value of farmland held by investment groups has more than doubled since the pandemic, according to the Financial Times. Even with increased interest, however, only 1-3% of the $3t farmland market is owned by investment funds, with the vast majority still owned by family-owned and operating businesses.
Farmland could make for an interesting investment case over the next decade. Much like the broader generational wealth transfer, 400m acres of farmland is set to change hands, as the average American farmer is now 58 years old. In the meantime, Americans will be watching for this asset class from Silicon Valley to Tractor Valley.
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