The question is who’s buying up farmland real estate in 2021. Randy Dickhut, Senior Vice President of Real Estate Operations at the Farmers National Company, looked into the numbers. He says a wide variety of farmers with operations of all sizes are purchasing the biggest percentage of farmland.
“The farmer is the prevalent buyer, and that typically, on average, most places they’ll buy 60 to 80% of the good cropland that comes up for sale. More than that, towards the 80%, so we see that. And then you get in some areas, say like North Dakota, that has probably 90 to 95% of farmers buy it.”
Farmers also make up most of the buyers in states that have anti-corporate farmland ownership laws.
“The states that have the anti-corporate farmland ownership laws change that make up in those particular states, so you’ll still see farmers buying the bulk of it. In a state that has corporate ownership, like Illinois or Arkansas, that there’ll be individual investors, which there are everywhere, that are buying, but also in like Illinois or Arkansas, you’ll see a small percentage that’s purchased by institutional investment funds or corporate ownership. So, that’s still a small part, but farmers are still the ones being the most aggressive right now.”
As the farm economy improved in 2021, more and more buyers were getting back into the farmland market.
“Last year, and at other times in the last few years, there have been fewer farmers trying to bid on the land with the farm economy the way it was. Starting last fall, going definitely through the winter, and still saying this summer sale season, there are more farmers actively bidding, but it’s still not quite the deep that it was as far as the aggressive bidding we saw in 2012 or 13, but there are definitely more bidders at each auction than there were.”
Starting last fall and escalating through the winter, Dickhut says Iowa is seeing the most buying activity among many predominantly rural states.
He says many of FNC’s clients think that the large corporate farms or investment funds are buying up the bulk of the available farmland. He says the institutional buyer demand is rarely as high as farmer demand for good cropland.
“There were more coming back in, trying to get a little more aggressive, but they’re always going to be more measured, as you kind of alluded to. They have limits on how high or how aggressive they will be as they typically don’t buy the auctions. We’re seeing more auctions right now because that’s the best way to know what the market will pay for your farm right now.”
Dickhut says some of the higher land prices he’s heard about include one farmer paying $18,000 an acre for land in Iowa, as well as some land selling for between $15,000 and $16,000 an acre in Illinois.