21 – Mar – 2024

Looming Challenge: Feeding the World Amidst Farmland Scarcity

The much-anticipated Ag Census, which was released by the U.S. Department of Agriculture in February, contained a statistic at the top of the very first table that likely caught the eye of most farmland investors. Total land in farms in 2022 fell to 880.1 million acres, down from 900.2 million acres in the last Census […]

The much-anticipated Ag Census, which was released by the U.S. Department of Agriculture in February, contained a statistic at the top of the very first table that likely caught the eye of most farmland investors.

Total land in farms in 2022 fell to 880.1 million acres, down from 900.2 million acres in the last Census taken five years earlier. For perspective, the loss of 20.1 million acres is an area larger than all the farmland in Indiana and is roughly the same size as the cropland harvested in Illinois, according to Census data.

It would be the equivalent to losing around 7.65 acres every minute since the 2017 study.

What’s more alarming, the area of farmland lost, and the rate of decline, were larger this Census than previous reports over the last 20 years, indicating that the problem is accelerating.

A closer examination shows that the bulk of acres lost over the last five years were in cropland rather than fallow ground, woodland, or pastureland, which underscores a major issue facing us all – feeding a growing global population with less and less productive land.

Dan Basse, a renowned economist and president of AgResource Company, highlighted this critical challenge facing the global agricultural sector in a speech he made just a few months before the USDA report was released.

Unless global grain production gets a big bump from yield increases, an additional 23 to 24 million acres of farmland will be needed in the next 5 years to meet food demand, he told the American Seed Trade Association.

“And remember, the modeling shows that somewhere between 2060 and 2065,” he explained, “the world runs out of [new] arable farmland.”

Once we reach “peak farmland,” when there’s no new acreage available to come online, Basse said humanity will face the daunting task of feeding an ever-expanding population with static land mass. This will require rapid advancements in technology, farm productivity, and farmland preservation.

The convergence of these factors creates a unique supply and demand scenario. It underscores the importance of farmland not only as a resource for food production but also as an attractive investment opportunity in a strategic asset in a world facing limited agricultural resources.

Green Street Advisory Group explored this topic in its June 2021 farmland investment primer.

The Green Street report underscores that while agriculture has seen significant innovation and productivity gains in the past decades, there have been no fundamental disruptions in how food is produced. Land remains the indispensable component of food production.

As population growth outstrips the expansion of farmable acres, the per capita availability of agricultural land is shrinking, intensifying the need for efficient and sustainable use of existing assets. And this attractive dynamic offers a unique combination of income stability and growth prospects for landowners through economic cycles, Green Street found.

The integration of USDA’s shocking agricultural land statistics, Basse’s projections, and the findings from the Green Street Advisory Group paints a clear picture: the importance of farmland is escalating in the face of global challenges.

As the world grapples with how to feed itself, the value of farmland – both as a means to produce food and as an investment asset – becomes increasingly evident. This scenario calls for strategic planning and investment, both to enhance agricultural productivity and to preserve and wisely manage the existing farmland.

In doing so, the global community can work towards ensuring food security for future generations while recognizing the intrinsic value of farmland in a world of limited resources.

Note: This article contains Forward Looking Statements.

FPI Insights
03 – Jan – 2024

Sometimes It Makes Sense to Sell the Farm

Farmland Partners has a rigorous underwriting process in place to evaluate potential purchases – one that considers soil quality, water availability, potential tenant pools, market access, the climate, and other variables. That’s because when we buy a farm, we do so with the intention of holding that property for the long haul, building a relationship […]
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