Small farmers squeezed out of purchasing land, partly by investors; states seek to limit foreign farmland purchases

Young farmers are being priced out of land by developers and investors, who include foreign buyers.

Young farmers often start out renting acreage, buying land as they can finance it, but that has become nearly impossible for the average young farmer, writes Linda Qiu of The New York Times: "Joel Gindo thought he could finally own and operate the farm of his dreams when a neighbor put up 160 acres of cropland for sale in Brookings County, South Dakota, two years ago. Five thousand or six thousand dollars an acre should do the trick, Mr. Gindo estimated. . . . But at auction, Mr. Gindo watched helplessly as the price continued to climb until it hit $11,000 an acre, double what he had budgeted." 

Qui reports, "What is happening in South Dakota is playing out in farming communities across the nation as the value of farmland soars, hitting record highs this year and often pricing out small or beginning farmers. As a result, small farmers like Mr. Gindo are now going up against deep-pocketed investors, including private-equity firms and real-estate developers, prompting some experts to warn of far-reaching consequences for the farming sector."

Jason Henderson, dean of agriculture at Purdue University and a former official at the Federal Reserve Bank of Kansas City, told Qui, "A series of economic forces — high prices for commodity crops like corn, soybeans and wheat; a robust housing market; low interest rates until recently; and an abundance of government subsidies — have converged to create a 'perfect storm' for farmland values." 

Meanwhile, there is emerging concern over foreign purchases of land, and at least eight states are looking to limit foreign ownership, reports Johnathan Hettinger of the Midwest Center for Investigative Reporting: "Amid growing concern about Chinese investment in U.S. agriculture, there has been a renewed push to limit and more closely monitor foreign ownership of farmland across the country. There are a number of reasons for the increased scrutiny, according to experts, and China is at the heart of many of them. Increasing foreign investment in agriculture. Rising land prices. Increasing investment in farmland. A trade war with China. A pandemic, where food shortages hit home for many Americans, and spurred concerns about food security."