Land Values Blogs

When we think of investment vehicles, our minds often drift to stocks, bonds, or commercial and residential real estate. But there’s an investment class that doesn’t always get the spotlight it deserves: farmland. Beyond its basic value as a commodity, farmland offers a range of unique benefits and hidden opportunities that set it apart from more traditional investments. Here’s why farmland is worthy of consideration for your diversified portfolio.

The appraisal team at Peoples Company was able to track 35 tracts or 2,754 acres sold at public auction in Iowa during July 2024. The average dollar per acre was $10,669, the average dollar per tillable acre was $13,495, and the average dollar per CSR2 was $178.

In the realm of agricultural lending, the process of appraisal holds significant weight. It's not just about assessing the monetary value of land and assets; it's about understanding the intricacies of farming practices, environmental impacts, and the overall sustainability of agricultural operations. Agricultural appraisal ensures that lenders can make informed decisions while offering financial support to farmers, fostering growth in rural economies, and ensuring food security.

Investing in farmland with a cash yield of only 2.5% might seem less attractive when current treasuries yield 5% or more. However, several strategic reasons exist to consider farmland a valuable addition to your investment portfolio. This article will explore these reasons, including inflation hedging, portfolio diversification, long-term appreciation, and other benefits that make farmland a compelling investment.

California has long been the United States’ most significant agricultural producer in terms of crop diversity and total crop value – its ag exports alone are worth more than the total production of 44 states and California is the only state that generates over 10% of America’s agricultural receipts.

Peoples Company tracks agricultural auctions across the state of Iowa. From this data, we calculate the average dollar per CSR2 point ($/CSR2) for sales of tracts with greater than 85% tillable land. Additionally, these tracts are largely unimproved or include minimal improvement contribution.

The appraisal team at Peoples Company was able to track 87 tracts or 7,243 acres sold at public auction in Iowa during June 2024. The average dollar per acre was $11,298, the average dollar per tillable acre was $13,538, and the average dollar per CSR2 was $168.

Farmland owners face several challenges to ownership related to utility companies, pipeline companies, highways, and others who need to acquire property for a potential new corridor through their land. There are increasing demands for power and energy sources which is leading to increased demands from agencies needing to acquire land. It is important for landowners and companies that need to acquire a corridor to understand the process of completing appraisals for eminent domain purposes.

As inflation rates continue to rise in the United States, investors have renewed interest in alternative investment opportunities that can outperform traditional asset classes without sacrificing stability. In 2021, The Land Report named Bill Gates as the top private farmland owner in America, since then investors of all sizes and backgrounds have flocked to the agricultural sector.

The appraisal team at Peoples Company was able to track 37 tracts or 3,711 acres sold at public auction in Iowa during May 2024. The average dollar per acre was $11,238, the average dollar per tillable acre was $12,604, and the average dollar per CSR2 was $165.