Investors are snapping up US farmland as they search for a hedge against inflation.
Land values in the Midwest grain belt have gained 25-30% in the past year as auctions draw intense bidding for available ground.
Demand for land has picked up in the past month as the war in Ukraine and financial sanctions on Russia curtail critical exports of wheat and corn from the Black Sea region. The UN’s world food price index in February rose by 24% from a year earlier.
“Interest in the asset class has never been this high before,” said Bruce Sherrick, a professor of farmland economics and director of the University of Illinois’ TIAA centre for farmland research.
However, rising costs for farmers have led some commentators to predict that a fall in values is coming. “The worry is they are investing into office buildings right before Covid,” said Craig Wichner, the founder of Farmland LP, an investment fund that owns more than $200m in land and raised more than $130m in March.
