September 15, 2016

In the past months, farmland prices have continued to creep downward, leaving behind the record prices of the past few years. The August 8th Land Values Report from the USDA National Agricultural Statistics Service shows farmland values dropped 0.3 percent nationwide in the past year. However, changes in farmland values vary from region to region within the U.S., with some areas such as Iowa seeing drastic declines and others seeing increases.

While the nationwide decline reported by the Land Values Report is small, it marks only the second time farmland values have dropped since the farmland crisis of the 1980s and the downward trend, along with constant media attention on declines, has prompted widespread concern.

But how, if at all, is this trend impacting farmland investors?

GAI News spoke with Paul Pittman, Chair and CEO of Farmland Partners, the largest farmland real estate investment trust (REIT) in the U.S., about declining farmland values and how it impacts investment strategy. According to Pittman, the asset values of farmland are holding up very well given the difficult operating environment that farmers face today and despite the negative headlines in the media. Because of this and because there is no real motivation for farmers to give up land en masse, he doesn’t expect a wholesale decline in farmland prices.

Strategically, Pittman explains that for farmland investors flat or declining farmland prices may present opportunities to buy. Moreover, the timing of farmland investments can provide another form of portfolio diversification and therefore help manage risk.

Hear GAI News’ full interview with Pittman here – including Pittman’s outlook for farmland prices and farm rents for both row and permanent crops, as well as the strategies used by investors to weather fluctuations in farmland values.

Note: This interview was recorded on August 18.

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Sarah Day Levesque

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