While the rapid increases in farmland values have slowed, the cost of buying farmland is still creating hurdles for producers looking to expand or for young farmers trying to get their start. Julia Freedgood, program advisor with American Farmland Trust, says prices may be stabilizing, but affordability remains a challenge.
“Although what I’ve seen sort of in the reporting is that incredible inflation in land values that we’ve seen sort of that post-COVID surge, probably driven by high commodity prices and low interest rates, has cooled some, but I don’t see anything going down. You know, pretty much what I’ve heard is the prices are still really elevated, but maybe not going up. It was like a 42% increase in cropland values in five years, which was just phenomenal. And I think about 39% overall. And so it seems like right now things are cooling off. So that would be good news for anybody who’s trying to expand or enter agriculture.”
High prices aren’t the only concern. Freedgood says agriculture is also competing with growing demand for farmland from commercial and industrial development, including renewable energy projects, housing, and data centers.
“But now data centers have come in, you know, certainly in Virginia, but we’re seeing in Texas and California in particular, with just, you know, they want flat, you know, large acreages, flat, well-drained, all the things that you want for cropland also are really suitable for development. And because rural communities don’t generally have zoning that addresses industrial development, they might not have zoning at all. They might not have much land use policy at all. There is just this incredible threat of data centers coming in and really not just taking agricultural land, but changing the whole economy in a rural community that just isn’t prepared for it. You know, because it’s not just the data center, it’s then all the things that happen around the data center that could change the sort of character of rural economies.”
Even when farmland isn’t being developed, she says simply finding land to purchase has become increasingly difficult.
“Land has been one of those barriers that’s really, really hard to overcome. And that’s partly, I think, because of the price. I think it’s also just availability. I think only 5% of US ag land is likely to be transferred in the next five years, but only 2% is likely to be transferred on the open market to non-relatives. So that means the supply is really tight. You know, people are holding on to it because it is an important asset and they’re not transferring it. And so entry is just really, really hard. And so more and more beginners and small farmers that want to expand are having to do it through rental markets. And then those rental markets are largely controlled by non-operating landowners.”
As fewer operators control more farmland, Freedgood says maintaining a diverse agricultural landscape becomes more challenging.
“That is a real problem if we’re thinking about the future of farm production, of our food supply, of all of our fiber, of all the other things that we really rely on our basic needs that we rely on agriculture for, if it’s a smaller and smaller and smaller number of people who are controlling all of the land for whatever, even if it’s still in agriculture, it may not be in diversified agriculture that’s going to meet all of the nation’s needs. It may be really geared just towards export markets or something like that, which in itself isn’t bad to be a big farmer producing for the world, right? I think that’s great. But it does become a problem if it precludes other farmers farming for their communities, farming, you know, for domestic food supply and so on.”
While there isn’t a single fix, American Farmland Trust is advocating for policies that help connect retiring landowners with beginning farmers and encourage more affordable access to farmland.
“I keep looking for that, you know, that kind of that special sauce that’s going to like solve all the problems. But right now I’m like, everybody’s just got to do a little bit. We all have to chip in and experiment to do pilot projects and figure things out until we can really find a way to make sure that there is a future for young and beginning farmers, as well as for, you know, the smaller operations that are really, really struggling to make ends meet and stay in the game.”