As U.S. Farmland Prices Hit Record Highs, Non-Farmer Investors' Influence is Likely Greater Perceived

A new analysis by Farmland Investor Letter shows that non-farmer investors are likely an increasingly dominant force in the public farmland market.

Madison, WI, March 22, 2012 --( As U.S. farm real estate prices set new highs on both a nominal and inflation adjusted basis across many regions of the country, most economists and real estate professionals have emphasized that farmers remain the leading purchasers of farmland. This is likely the case for the entire farm real estate market, which is dominated by private sales among related parties such as family members, tenant operators or neighboring farmers.

But a new analysis by Farmland Investor Letter shows that individual and institutional investors are likely an increasingly dominate force in the public land market. In central Illinois, for example, Farmland Investor Letter analyzed listed and auction farm sales by Soy Capital Ag Services, a Decatur-based brokerage and property management company. Investor purchases represented 73% of the $70.5 million of farm tracts sold by Soy Capital in 2011, up from 66% in 2010.

"No quantitative research on the extent of investor participation in the U.S. farmland market exists," says Michael Fritz, editor of Farmland Investor Letter. "This limited look is revealing in that it suggests outside investors are playing a more significant and growing role in farm purchases than is currently perceived."

In the Soy Capital analysis, investors in central Illinois farmland paid an average $8,688 per acre in 2011, a near 9% premium over the average $7,985 per acre paid by farmers. That's down slightly from 2010, when investors paid an average 11% premium over farmer buyers. A more complete analysis of investor participation in the U.S. farmland market will appear in the upcoming issue of Farmland Investor Letter.

About Farmland Investor Letter: Farmland Investor Letter is published by Mercator Research, LLC, a Madison, Wis.-based firm focused on valuation and investment return trends for agricultural real estate. Subscribers include individual landowners, appraisers, family investment offices, endowments, lenders, U.S. government agencies, real estate brokers, and other industry professionals. Mercator Research also hosts, an agricultural real estate news, analysis and information portal.
Mercator Research LLC
Michael Fritz