Athletes invest in Iowa farmland, which rose 17% in value in 2022, partly due to investors, who made 27% of purchases

Joe Burrow (Photo illustration by Front Office Sports)

Cincinnati Bengals quarterback Joe Burrow, who advanced his team's defense of its Super Bowl title on Sunday, is investing some of his money in Iowa farmland, along with other professional athletes.

Burrow was part of "a group of about 25 athletes [who] pooled $5 million for an agricultural investment fund to purchase farmland," Abeer Allam reports for Successful Farming. "The first purchase was a 104-acre corn and soybean farm in northern Iowa, Front Office Sports reported this month."

The athletes "will lease the land to farmers and seek a single-digit-percentage annual return on the total investment, FOS reports. "The group — which will purchase four additional farms within the next few years, seeking a diverse set of agricultural assets — have looked into watermelon farms in Oregon, which tend to be smaller and offer higher per-acre rent." Allam reports the move was prompted by "investment in farmland by high-profile billionaire buyers like Bill Gates and Warren Buffett . . . to diversify their investment portfolio and hedge against inflation, experts say."

“Beyond the traditional reasons of buying recreational land, many investors see farmland as a stable asset that could generate robust returns,” Wendong Zhan, leading researcher of the Iowa Land Value Survey at Iowa State University and assistant professor at the Dyson School of Applied Economics and Management at Cornell University in Ithaca, N.Y., told Allam. “The declines during downtimes tend to be less drastic.”

The Land Value Survey found that the average value of Iowa farmland "increased 17% to $11,411 an acre in November 2022 from November 2021, the highest nominal value ever since the 1940s," Allam notes. "The value growth has been driven by several factors including high commodity prices, bumper crop yield, low-interest rates, limited land supply, and strong demand from investors. . . . Investors represented 27% of land sales in Iowa, split between local and non-local investors, while new farmers accounted for 4% of sales in 2022, according to the survey."

Higher land value is good news for owners, but "Farmers who still have farmland mortgages and/or rent many acres from others, face a much higher cost of financing and cash rents," Allam notes.