Farmland Values Hit Record Highs, Pricing Out Farmers (Published 2022) (2024)

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, S.D., 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 for.

“I just couldn’t compete with how much people are paying, with people paying 10 grand,” he said. “And for someone like me who doesn’t have an inheritance somewhere sitting around, a lump sum of money sitting around, everything has to be financed.”

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. In the state, farmland values surged by 18.7 percent from 2021 to 2022, one of the highest increases in the country, according to the most recent figures from the Agriculture Department. Nationwide, values increased by 12.4 percent and reached $3,800 an acre, the highest on record since 1970, with cropland at $5,050 an acre and pastureland at $1,650 an acre.

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, said Jason Henderson, a dean at the College of Agriculture at Purdue University and a former official at the Federal Reserve Bank of Kansas City.

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.