Civil Eats | 3 January 2022
Beginning farmers, farmers of coloro outbid as farmland prices soar
By Greta Moran
In April 2021, Gabriela Pereyra and her wife thought they had found the ideal parcel of land. It was located in New York’s Hudson Valley, which is known for its fertile soil, and it was just right for the small-scale farm they dreamed about—11 acres of land with the ability to build infrastructure hooked up to electricity and plumbing. It was listed for under $200,000, just within the realm of what they could afford.
“It sold for a crazy price because it offered the NYC people what they wanted. Catskill [Mountains] views, rushing water, and privacy. [The owner] had seven offers in the first week of the proverbial bidding war,” the property’s realtor said by email.
“I was really, really heartbroken that day,” said Pereyra, though she wasn’t entirely surprised. “The thing is, I see that every day,” she added. In her role as the co-director of the Land Network at the Northeast Farmers of Color Land Trust (NEFOC), Pereyra has watched a number of other farmers in her network have similar experiences. And she says the pandemic has deepened the longstanding crisis of land access, especially for people of color, who own just 2 percent of U.S. farmland.
“We’re seeing more and more people encroach on those areas who want second homes, more space, and connection with nature, and [they] have zero ties to the communities,” she said.
Since the pandemic began, rural residential land and agricultural land values have spiked across the country. In 2020, there was a 6.8 percent increase in residential land sales, which the Realtors Land Institute and National Association of Realtors consider to be “underpinned by strong home-buying activity.” This coincided with an uptick in farmland real estate value by 7 percent across the country between June 2020 and June 2021, according to a survey by the U.S. Department of Agriculture (USDA).
Low interest rates, now close to zero, are driving sales across the country. But the spike in farmland prices stems from a confluence of additional factors—high agricultural commodity prices, the rush for rural land and housing, and the increasing scarcity of farmland—varying across regions, according to agricultural economists and land access experts. It’s not unusual for farmland prices to increase: Aside from 2016 and 2009, farmland values have been steadily going up since 1988. However, the mid-year increase of $220 per acre reflects the sharpest rise since 2012.
“It doesn’t look like farmland values have increased by that much since we were pulling out of the Great Recession, almost 10 years ago,” said Laura Barley, a program manager at American Farmland Trust. “So, to me this [increase] is a big deal.”
And while It’s unclear how long farmland prices will tick upward, a survey of farmland in the Midwest saw prices jump by 18 percent as of October of this year. Todd Kuethe, an agriculture economist specializing in farm real estate, anticipates that prices will keep rising for “at least the next six months to a year.” As the cost of farmland continues to rise, and a large cohort of aging farmers retire, the odds of owning land have gotten increasingly worse for farmers like Pereyra.
A Deep-Rooted Crisis
The rising farmland prices over the course of the past decades, and the current escalation of this trend, is just one of the barriers to land access faced by farmers of color as well as lower-income farmers without family land. For one, a lot of farmland is inherited or gifted, passed between mainly white landowners, without being placed on the market. As that land grows in value over time, it contributes to the growing racial wealth gap as the barriers for purchasing farmland grow steeper.
Stephanie Morningstar, the executive director of NEFOC, explains that the profound racial inequity in farmland ownership is “not an accident”—but is instead the result of racist policies and forceful dispossession of Indigenous land. For instance, the Homestead Act of 1862 reallocated 270 million acres of public land, stolen from Indigenous peoples, almost entirely to white people. And generations of documented USDA discrimination against farmers of color within its loans and training programs resulted in Black farmers losing an estimated 90 percent of their farmland between 1910 and 1997.
To an extent, the Biden Administration has attempted to rectify this history through the currently stalled $4 billion loan forgiveness program for Black farmers and other farmers of color, while investing $67 million in the Heirs’ Property Relending Program, which could help the largely Black owners of heirs’ properties—or land that has been passed down without a legal will—retain permanent legal ownership of their land.
Even if USDA and other loans are available, many young farmers and farmers of color find it challenging to meet the requirements, or may be unwilling to take on the growing debt from farmland as it moves further out of their price bracket. Although the current spike may flatten, this upward trend will likely continue given that “land is a scarce commodity,” said Neil Thaper, the co-director of Minnow and a researcher of alternative structures for land access. “Based on our economic theory, there is always going to be demand that is only going to increase over time,” he said.
As farmland becomes more scarce, replaced by housing, other kinds of development, and environmental pressures, the ratio of demand to available land will grow even higher. This makes it a very reliably appreciating investment, leading to a surge of investments in farmland from billionaires, banks, and other institutions and non-farmers increasingly controlling vast tracts of farmland. For instance, Bill Gates now owns over 269,000 acres of farmland in 19 states, making him the largest private owner of farmland in the U.S.
The Teachers Insurance and Annuity Association of America (TIAA), a major U.S. pension fund, claims to now be the largest manager of farmland assets in the world. Its investments in recent years have ranged from the Mississippi Delta to Brazil’s Cerrado, both of which have been linked to the uprooting of farmers of color. TIAA has also controversially funded a research center at the University of Illinois dedicated to studying “agricultural asset valuation and financial performance with emphases on farmland markets (and) factors influencing farmland values.”
“Like gold, farmland is seen as a safe haven for capital,” wrote Madeleine Fairbairn, an associate professor at University of California Santa Cruz, in her recent book Fields of Gold, which documents the transformation of farmland into a new financial asset class. She notes that farmland prices are not correlated with stocks and bonds, but do increase with inflation, which means that they are seen as a safe, less volatile investment.
All of these historical and structural factors have long constrained land access, while the recent developments—the pandemic-fueled rural land rush and fluctuations in the agriculture market—may be tipping the crisis over the edge.
“COVID was the canary in the coal mine for land access,” said NEFOC’s Morningstar. “We saw this mass exodus of folks buying up land, sight unseen, in rural areas within a few hours drive from a major city. And what that did was basically take away any hope from folks like us, who were barely able to meet the financial requirements for buying land before that.”
As a result, farmers on the margins continue to rely on rented farmland, which often prevents them from making investments or planning very far into the future. Land owners, on the other hand, often welcome farmers as renters because maintaining the land in agricultural use gives them a tax break in every state. Ensuring that someone is actively farming the land can also be an obligation when land is protected by an agricultural conservation easement, which comes with a tax reduction and has become more common in rural areas in recent years.
The Northeast’s Surging Farmland Prices
The crisis of land access is especially acute in the Northeast, which has some of the highest farmland prices in the country, while being home to mostly small-scale farmers whose incomes don’t mirror the region’s average price of land. Other regions of the country, including some parts of California and the Pacific Northwest, face similar constraints.
By mid-2021, farmland in the Northeast ballooned to an average of $6,000 per acre, which is significantly higher than the national average of $3,400. Massachusetts saw the highest annual increase in the country by 21 percent, pushing the cost of the state’s farmland to $13,700 per acre. Still, this falls short of Rhode Island ($16,400 per acre) and New Jersey ($14,400 per acre). Vermont’s farmland saw a 10 percent spike, rising to $3,900 per acre.
In areas with dense populations, the land is closely tied to the housing market. But in places like the Midwest, however, the value of farmland rises in closer step with farm incomes, which climbed in 2020 and even higher in 2021, reflecting rising corn and soybean prices and hefty government payments for commodity farmers (due to trade and coronavirus relief).
“So, when corn and soybean prices are high . . . . farmers have more cash, so they’re more likely to bid up the price,” said Chris Laughton, who works at Farm Credit East, the Northeast’s largest agricultural lending cooperative.
But in the Northeast, “there is way less commodity farming and more things like fruits and vegetables and horticulture,” said Laughton. The region’s many small-scale farmers have received much less in emergency relief over the last several years. And while it’s hard to pinpoint the exact pressures on Northeast farmland based on the transactions he’s observed, Laughton points to both prosperous local markets and the pressure from people seeking rural housing.
These trends will likely continue. “Depending on the location, I think farmland values are continuing to go higher, at least in New England,” said Laughton. Based on Farm Credit East’s transactions, he estimates that farmland prices in the region have risen between 5 and 15 percent this year, depending on the location and quality of land.
The Impact on Young and Beginning Farmers
American Farmland Trust (AFT) found that 11 million acres of agricultural land has been “paved-over, fragmented, or otherwise converted to new uses that jeopardize farming” between 2001 and 2016. In New England, the vast majority of the converted farmland—85 percent—was lost in metropolitan counties, which often “feature broader peri-urban and even semi-rural landscapes within them,” according to an AFT report.
In an unfortunate overlap, the most vulnerable regions to development also tend to be home to farmers who are already struggling with land access. “There’s a consistent trend for farmers of color and new and beginning farmers to exist in these peri-urban and metro-adjacent areas,” said Laura Barley, the manager of AFT’s Farms for a New Generation program and the report’s author. And the pressure on these regions has only intensified over the last two years.
Case in point: Since the pandemic’s onset, Ryan Hvizda, the owner of Hvizda Realty Group in New Hampshire, has observed more cash buyers waiving inspections to secure properties more quickly—an option that isn’t available to most farmers who must have the property appraised to receive a loan.
“That just pushes [farmers] completely out of the market because you have somebody coming in with cash, no contingencies,” said Hvizda.
In New York’s Hudson Valley, home of the nation’s two most popular towns to relocate to during the pandemic, agricultural real estate has skyrocketed in the last year. According to the Ulster County Board of Realtors, which represents multiple counties in and around the valley, the number of farmland sales there went up by 16 percent and the average sale price has increased by 32 percent, between January 1 and December 8 of 2021.
As the real estate boom extended north of the Hudson Valley, Sarah Kingzack, who runs KZ Farm on 48 acres near the town of Westport, overlooking Lake Champlain, saw her hopes of expanding the operation dashed as she witnessed what she calls a “land grab.”
When Kingzack and her partner bought the land in 2016, they hoped to eventually expand their grass-fed cattle and organic vegetable farm into the land abutting their property.
“In the midst of all this, we’re thinking, “Oh my goodness, it might be now or never for the hayfield next door,” said Kingzack. So, they initiated a conversation with the owner of the land about purchasing it. But soon after, the owner contacted their neighbors—who don’t have a farm, or any intention of farming—and sold the land to them, instead.
Similarly, in Connecticut, Robert Chang watched as the historic farmland across from the 14-acre property where he grows produce and flowers at Echo Farm climbed to a price well out of his budget: over $28,000 per acre. Before the land went up for sale, he expressed to the current landlord his interest in purchasing it, hoping to expand his farm. But the current price makes that impossible.
“You’d have to find some very wealthy angel to come in to try to save it for farmland and that’s not likely to happen. But I’m hoping for a miracle,” said Chang.
Beyond his own interests, Chang is troubled that the land will likely end up in the hands of wealthy non-farming landowners, which he says is “not really the future for agriculture I want.”
The 39.7 acre property, listed by LandVest, is currently on sale for $1.15 million. It is advertised as “gently sloped acres . . . offering its abundant hay to clouds and sun and local farmers.” Not long ago, the land was part of a 92-acre dairy farm, whose owners sold 14 acres to Chang (after he wrote them a letter asking for a lower price). The remaining 78 acres went to a real estate investment company.
Escape Plans and Second Homes
Jennifer Ifft, an associate professor in the department of agriculture economics at Kansas State University, describes the high farmland values in the region as largely reflecting “demand for development of rural properties and rural homes.”
The Northeast’s housing appeal may also be driven by fact that the region is being seen as a potential haven from the worst impacts of the climate crisis, suggested Nina Young, a realtor with Maine Farms Realty and the Maine Farmland Trust. Young has observed generations of families moving to Southern Maine and buying historic farmland to live on for the long-term—a move she sees as a way to take shelter from both COVID-19 and climate change. “The air is cleaner here,” said Young. “We generally have plenty of water in Maine.”
While Maine and the Northeast are threatened by climate change, especially increased flooding, the region is less vulnerable to the intensified droughts, dangerously high temperatures, and wildfires that routinely wipe out crops and endanger farmers’ lives in other states.
This trend toward hobby farms and climate escape plans adds to the number of actual farmed acres that will be taken out of commission, while contributing to the rising cost of farmland. “As non-agricultural factors really begin to influence the value of the land, it makes it harder for new and beginning farmers to be able to justify paying for that land,” said Nathan L’Etoile, who leads AFT’s programs in New England.
When this happens, farmland effectively moves to a market, one that isn’t for commercial farmers.
Already, there are many historic farm properties in the Northeast that are sold as luxury properties, aimed to serve as country estates or investment properties. The high-end agriculture and forestry real estate company LandVest specializes in this kind of real estate, advertising farms under “lifestyle” properties.
“The buyer pool is into this recreationally, though we do get some folks who are committed agricultural people,” said Slater Anderson, the vice president and managing director of real estate at LandVest.
A handful of LandVest’s properties advertise prime agricultural soils. For instance, a 206-acre historic tobacco farm with “95 acres of prime agricultural soils and 58 acres of soils of statewide significance, predominately Enfield and Ninigret silty loams,” unprotected by a conservation easement, is currently on sale for $2.85 million in Southwick, Massachusetts. According to deed records, the parcel has been an investment property for decades. It also serves as a telling example of the way land has moved through the current asset economy.
In 1953, the property was deeded to General Cigar Company, the world’s largest cigar manufacturer, which changed its name to Culbro Corporation in 1976. In 1997, Culbro Corporation transferred the property to Culbro Land and Resources LCC, which changed its name to Griffin Land and Nurseries in that same year and then changed it again in 2015 to Indus Realty Trust, which acquires, develops, and owns properties in “high-growth, supply-constrained markets.”
Indus Realty Trust’s stockholders include BlackRock and The Vanguard Group, which means that the world’s largest asset managers have been indirectly profiting from Massachusetts’s most fertile soils—and they’re now for sale. The realtor for the property told Civil Eats that he sought out conservation groups with hope that they can collectively pool their resources to purchase it, although whether that will actually be feasible remains to be seen.
Land Sharing on the Rise
After a year of searching, Gabriela Pereyra eventually did luck into land ownership, purchasing a 20-acre parcel that checked off most of her boxes. In a few years, she intends to move the land to a model of collective ownership where others can share and help cultivate the property, while inviting her larger community to connect in other ways to the land.
“Our community is Black and Indigenous queer folks who wants to be in relationship with the land—that doesn’t necessarily mean farming per se but also using the land as a safe space for our close circle,” said Pereyra.
Other more formal forms of collective land use have emerged in recent years, giving farmers more options than renting and owning land, while moving beyond thinking of land as a transactional commodity.
For instance, Minnow aims to secure long-term land tenure for people of color in California through collective and Indigenous governance. Neil Thapar, the project’s co-director, notes that they’re currently developing a land trust with tribes in Mendocino County. And the Agrarian Trust places farmland in collective trusts, known as local “agrarian commons,” where instead of holding a title to the property, farmers own a multigenerational lease.
NEFOC has been supporting the development of land stewardship cooperatives, which has so far been a more common model for housing. “We’re finding collectivity is really key,” said Morningstar, “not only for pooling financial resources but also for pooling labor and creating a community of care.”
Like Minnow, NEFOC is working to build understanding and agreements with Indigenous people, prioritizing returning the land to its original stewards. So far, they’re a “land trust without land as we build trust,” Morningstar said.
More recently, the Every Town project, launched by Kenya Lazuli who works at NEFOC and co-founded Radical Imagination, emerged in Vermont during the pandemic. It aims to secure at least one parcel of land or building in every town in the state to be “held in trust for permanent stewardship and access for Black, Indigenous, and people of color.”
As farmland prices escalate, these emerging structures—though still few and far between—are intended to offer ways forward for many farmers left out of the opportunity to own land. Yet, of course, everyone working to improve land access for under-resourced farmers is swimming upstream, amidst a rush of investor and developer money and against the long tide of history.
