Arkansas, Mississippi Farmland Hot Commodity Among Ag Funds

Although the U.S. Midwest is the benchmark region when it comes to U.S. farming, Arkansas and Mississippi Delta land has increasingly been drawing the attention of institutional agricultural investors, due to its high quality soil, water supply, and lower price per acre.

Midwest U.S. farmland can cost over $10,000 per acre, while the best quality land in the Mississippi and Arkansas Delta costs approximately $5,000 per acre, causing institutional buyers and brokers, such as GMO Renewable Resources and Farmland Advisors to recognize the region as offering potential valuable assets.

Over the past five years, Farmland Advisors, a division of Cushman & Wakefield Commercial Advisors, have represented sellers of approximately $60 million in farmland in the Southeast, and in 2014 alone, sales volumes exceeded $18 million, with two of its largest land deals occurring in the Arkansas delta. The group is focusing particularly on four counties in West Tennessee, seven counties in North Mississippi, and 17 counties in Arkansas. However, due to the availability of land parcels of 500 acres or larger being tight, the group is considering expanding its area of interest down in Louisiana, and into the Boothill of Missouri.

Over the past few years farmland values in the Delta have reached historic highs as commodity prices for corn, rice, and soybeans skyrocketed, and traditional financial markets lost ground. But with the recent decline of commodity prices, land prices in the southern delta region have not necessarily followed suit.

“Now that commodity prices have fallen significantly and we’re seeing more stability in the economy, the land values in the Midwest have declined,” says Jeff Barry of Farmland Advisors. “We haven’t seen that here yet because it takes time to trickle down. Plus, with so few people selling, land value has remained strong.”

This tight supply may loosen in time given the aging farmer population, and as retiring farmers without willing generations to assume the business begin liquidating assets, but for now, buyers still outnumber sellers in the region.