By: Artem Milinchuk, Founder, FarmTogether

Farmland rarely experiences sharp inflection points, yet the dynamics emerging from 2025 signal a market undergoing meaningful realignment. Rather than returning to the broad appreciation cycle of the early 2020s, the sector is entering 2026 with a different mix of influences: more measured valuation trends, improving operator economics, and continued innovation in investment structures. These conditions are shaping how the asset class may be evaluated within broader real-asset strategies in the year ahead.

Following the unusual downturn in 2024—the first negative annual return reported by the NCREIF Farmland Index—fundamentals improved in 2025. USDA forecasts place U.S. net farm income near $180 billion, among the stronger inflation-adjusted levels of the past decade. Variable input costs — including fertilizer, chemicals, and fuel — continue to be significant components of total production expenses, which are forecast to remain elevated even as some overall expense growth moderates relative to prior years. Healthier producer balance sheets have historically supported more stable rent coverage and income performance in leased farmland structures.

Valuations also stabilized. USDA surveys indicate that national cropland values rose in the mid-single-digit range in 2025, marking the fifth consecutive year of appreciation. While the national average remains constructive, a defining feature of the year was greater regional differentiation. Markets exhibited greater regional differentiation in 2025, with some areas showing steadier pricing than others. Water reliability, diversified cropping systems, and infrastructure quality are well-established structural factors influencing agricultural productivity and land use, while regions facing water constraints or concentrated crop exposure have historically faced greater operational variability.

The investment landscape evolved as well. Nuveen introduced a privately placed, perpetual-life farmland REIT in 2025, designed to provide periodic NAV reporting and structured liquidity features. In a separate development, WisdomTree completed its acquisition of Ceres Partners, reflecting growing interest in integrating farmland exposure within broader investment platforms. These initiatives contribute to a more defined spectrum of access points, with structures that differ in liquidity, governance, and operational exposure.

Policy developments added another dimension. The One Big Beautiful Bill Act expanded agricultural support through higher reference prices, strengthened commodity-program risk-management tools, and continued funding for conservation and rural infrastructure. While the long-term effects will unfold over time, these measures underscore the ongoing policy emphasis on agricultural productivity and resilience—factors that inform multi-year planning for both operators and landowners.

Taken together, the conditions emerging from 2025 introduce several considerations for institutional allocators entering 2026. Income stability—reinforced by healthier operator economics and long-duration lease structures—may remain a central feature of farmland’s appeal as an income-oriented real asset. Regional and crop-specific variability is likely to continue, elevating the importance of granular underwriting and operator alignment. Ongoing innovation in investment vehicles may widen the available toolkit for institutions seeking scalable or long-duration exposure. Meanwhile, the continued development of verification frameworks for soil health, water efficiency, and regenerative practices may gradually influence underwriting assumptions and tenant selection as the data infrastructure supporting these practices becomes more robust.

What emerges from 2025 is not a single directional signal, but a more nuanced landscape defined by measured valuation trends, strengthened operator fundamentals, and expanded structural options. Farmland remains characterized by low historical correlation to traditional markets, finite supply, and essential use cases—attributes that continue to differentiate it within real-asset portfolios. In 2026, strategy design is likely to benefit from a focus on regional dynamics, operational resilience, and clarity around investment structure selection, rather than broad market momentum.

*NCREIF Farmland Index, 2024 annual total return data (proprietary; widely cited as –1.03%)

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