December 8, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

Farmland Partners (FPI) has re-entered the state of Texas after divesting property there in 2020, announcing the acquisition of a 3,834-acre farm for $12.1 million. 

FPI is the largest publicly traded farmland REIT measured by U.S. acreage in the country. Operating as an internally managed REIT, the company owns and seeks out high-quality farmland in North America, and makes loans to farmers secured by farm real estate.

In November of last year FPI made news when it acquired 100 percent of Murray Wise Associates (MWA) through a deal valued at $8 million – creating an unparalleled platform for farmland investing. 

MWA was founded by Murray R. Wise, the founder of Westchester Group (the largest institutional farmland asset manager in the world), as a spin-off from Westchester’s broker, auction, and farm management business when the company was acquired by TIAA in 2010.

Headquartered in Champaign, Illinois, and with offices in Clarion, Iowa, and Naples, Florida, MWA focuses on farmland brokerage for institutional investors, farmland auctions, and farm management. Together, FPI and MWA launched a joint asset management platform during a period of strengthening interest in farmland as an asset class. 

Currently, FPI owns and/or manages merely 195,000 acres, growing 26 crop types across  Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, Texas, and Virginia, overseen by more than 100 tenants.

This latest addition to the portfolio primarily produces potatoes, along with corn and wheat, in Dallam and Hartley Counties in the northwest region of Texas.

The land is rented to CSS Farms – one of the largest potato growers in the U.S., and a major chip supplier. Founded in 1986 by two farming families, CSS is a vertically integrated agricultural company that has grown to have a presence in 10 states sustainably producing potatoes and rotating crops.

In a thought leadership article titled The Long and Short of Leases, published by FPI on October 28 of this year, the company noted, “Farmland Partners minimizes default risk by considering several factors during our underwriting process, including a farmer’s track record of cash flow; balance sheet strength; history of productivity growth; operational economies of scale; and the use of technologies and equipment to boost efficiency and productivity.”

“This was an important purchase for the Company,” said Paul Pittman, chairman and CEO, FPI. “In addition to expanding our portfolio into a key agricultural state, the farm was attractive because it has a good lease with a well-known tenant.”

In addition to the rental income generated by the asset, FPI stated that it expects this farm to continue to grow in value, given historical data. Since 1970, agricultural land in Texas has averaged 5.7 percent in annual appreciation, according to the most recent data from the USDA.

Likewise, potatoes are a savvy bet. Despite receipts for fruits and vegetables falling by 10 percent since 2020, the U.S. Farm Bureau noted that potatoes have bucked the trend due to strong processing demand from both North America and international markets. This has driven the U.S. seasonal-average potato price over $10/cwt, or an average increase of 14 percent from 2020-2021. And as drought cuts into production in Idaho and Washington as demand continues to rise, the Bureau expected record potato prices into this year. 

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.