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To snobs in New York and Los Angeles, the rural US midsection is “flyover country”. To some large investors, however, it is the next big thing.
Land prices in fertile heartland states have been climbing at a stunning pace as record or near-record prices for corn, soyabeans and wheat translate into more profit per acre. Farmers, flush with cash, are bidding loudest at frenzied auctions, but institutional investors from pension funds to wealthy foreigners are increasingly part of the scene.
“It’s absolutely exploding. The land market is so tight that the difficulty right now is just finding properties for the large number of buyers out there,” says Jeff Waddell, president of Martin, Goodrich and Waddell, a farm manager and land broker outside Chicago. “Those buyers are everything from farmers in Illinois to investors from Argentina.”
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US nominal farmland values have roughly doubled since 2000 and risen 58 per cent after inflation, the Federal Deposit Insurance Corp says. In some fertile areas, such as Iowa and Illinois, land prices have topped $10,000 an acre.
More than 50 investment funds have been formed to buy crop land in areas from Brazil to eastern Europe, according to a report for the Organisation for Economic Co-operation and Development by HighQuest Partners, a consultant. The US, with world-leading exports of corn, soyabeans, wheat and cotton and strong property rights, is drawing a lot of interest.
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Source: Financial Times