17 – Apr – 2024

The Vital Role of Agriculture Serves as a Foundation for Farmland Investing

“Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country.” This quote, made during the Democratic National Convention in 1896, was meant to be a reminder to the […]

“Burn down your cities and leave our farms, and your cities will spring up again as if by magic; but destroy our farms and the grass will grow in the streets of every city in the country.”

This quote, made during the Democratic National Convention in 1896, was meant to be a reminder to the country about agriculture’s importance to us all.

Agriculture is more than just a sector of the economy; it is the very foundation upon which civilizations are built because the steady production of food is crucial for the survival and growth of cities. Without productive farms, urban centers would struggle to sustain their populations, leading to a cascade of socio-economic challenges.

The quote’s author, William Jennings Bryan, was a member of Congress in the late 1800s who also served as the Secretary of State and ran for president. He knew that agriculture was at the center of America’s founding and will continue to play an indispensable role in American society for generations to come.

Farmland Partners agrees, and we understand that beyond being the backbone of human sustenance, agriculture’s importance presents a compelling case for farmland investment.

Green Street Advisory Group made this case in its 2021 farmland investing primer.

“Food consumption is a basic, physiological need and therefore agriculture is considered an industry essential to Homeland Security,” they noted. “U.S. government’s safeguard of our food supply intrinsically provides a backstop of long-term cash flow stability and sustainability to U.S. farmers.”

The country’s crop insurance system is a prime example. This public-private partnership, which marries government funding with farmer-paid insurance premiums and private-sector insurers, helps create a safety net for farmers in case their incomes are negatively affected by weather or market disruptions.

“These programs have provided a relatively high level of stability to farmers income over time, with cash flows at the end of the harvest period typically not below ~90% of expectations, while still retaining upside potential when commodity prices rise,” Green Street wrote.

Translation: agriculture is resilient, even in turbulent economic times, which can offer a buffer against market volatility. That also means that farmland tenants are in a good position to meet their rent obligations and not default.

Such dynamics help explain why farmland values have historically risen, averaging appreciation of roughly 6% a year since 1970, according to data from the U.S. Department of Agriculture.

And with lawmakers currently debating how to strengthen farm policy in the next Farm Bill, we believe that the farming sector’s success story will likely continue.

Why? Because agriculture’s fundamental role in society cannot be overstated. It is the lifeline of human civilization, and its stability and growth are critical to the sustenance of urban centers.

The investment in farmland, therefore, is not just an economic decision but a strategic move towards ensuring food security and economic stability.

As aptly put by William Jennings Bryan, the destruction of farms can lead to the downfall of cities. In contrast, the nurturing and investing in agriculture can promote prosperity and stability, making farmland investing a prudent and essential choice for the future.

Note: This article contains Forward Looking Statements.

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21 – Mar – 2024

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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 […]
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FPI Insights
12 – Jul – 2024

The Strategic Value of Contiguous Farmland

Farmland Partners receives calls frequently about potential acquisition opportunities – from agents representing for-sale properties, farmers or heirs looking to liquidate, and even other institutional investors interested in reallocating capital. FPI passes on a lot of these opportunities. That’s because we primarily focus on farms with prime soil quality, water availability, market access, and climate […]
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