Farmland Stability Draws New Investors as M&A Trends Shift

Following who buys farmland is an important indicator for how the market is performing across the country. New investors want the stability it provides. At the 2026 Iowa Land Investment Expo, the Hot Topics in Land and Agribusiness breakout session, panelists detailed the uncertain trend of mergers and acquisitions.

New Entrants into Farmland Sector

There is ongoing, structural change in agriculture according to Bruce Sherrick, a professor of farmland economics at the University of Illinois. He said questions of new entrants into the sector are his number one call.

“I don't know if you call that mergers and acquisitions. But the new changing sources of capital that are looking, and new structures that are looking next door right now…the interest in the asset class has actually gotten much greater, not much less,” Sherrick said.

“As we've gone through the chance for some structural readjustment, the thing that's been very constant is the performance of the asset in-portfolio has become much more attractive to the larger investors.” Sherrick added.

Because of interest and inflation rates, more people are interested in buying land. Sherrick said inflation has been higher and more tied to wages, so land becomes a good hedge.

That is a similar point that the Iowa Soybean Association recently made. 

M&A Trends Indicate Change

Looking at the last 15 years, People's Company Director of Capital Markets Dr. Dave Muth pointed out a trend of capital looking for safe harbor, resulting in a lot of growth for institutional funds.

“A lot of mechanisms in that institutional space emerged, getting money into farmland. And a lot of those structures are in that kind of 10-year type of time horizon and how they were put together, certainly some that were structured a little bit differently,” Muth said.

He continued, “But you roll in, had some success on dispositions, but largely speaking, broadly speaking, that next capital raise was difficult for a lot of these institutional folks.”

The changing cost of capital was a shock to the system, according to the panelists. Muth said that he has watched capital shift a little from a consistent source of institutional investment into farmland for high-net-worth participants.

NPR has been following the transition and reported in 2020 how big-money investors gear up for a trillion-dollar bet on farmland.

Political Momentum Needed for Farm Systems

The structure itself is changing, especially from a federal investment perspective, according to Harrison Pittman, director of the National Agricultural Law Center.

He has concerns for the future in what he calls “a century of political clout” for in-built federal programs like the Farm Credit System and the U.S. Department of Agriculture.

Pittman said that there was enough momentum to compel taxpayers to keep investing. “A lot of this, I think, is changing in an environment where it's difficult. If you look at just a map of the U.S. House of Representatives, there's not very many members of the House who are strictly in an ag district anymore,” said Pittman.

RELATED: Harrison Pittman told American Farmland Owner that the political focus on Chinese ownership of American farmland may be exaggerated. 

“And so, on that capital side as it relates to federal income, federal money,” Pittman said, “I think that's a massive challenge for the ag industry. That's because deficit politics is going to become much more involved.”

As agriculture tries to maintain what it has built since the Great Depression era, it must deal with the growing problem of the U.S. government climbing toward $40 trillion in federal debt. That debt recently surpassed $38 trillion by climbing $1 trillion in the shortest amount of time ever outside the pandemic, according to PBS research. 

Strong Balance Sheets but Farm Concerns Remain

On the hot topic of agriculture trends, Muth said there is a little bifurcation in the market.

“There's still a lot of room to hand us some shallow losses from an operator's standpoint. We're sort of seeing a little bit more uncertainty,” he said. “We're seeing a little bit more of the sale-leaseback, adding some liquidity on the balance sheet kinds of transactions. Overall, mostly it's been successful from a transactional standpoint.”

RELATED: Dr. Dave Muth told American Farmland Owner how wind turbines can impact farmland values.