Approximately 2 million farms and ranches exist in America. Some are home to industrial farming and conventional cattle raising, while others produce organic products and microgreens. Whether conventional or not, investing in a farm might just be the right financial move for those who can afford it. Farmland, according to a Forbes article published in 2018, are untapped assets, as the demand for them will be more essential over time. Farm real estate prices have steadily gone up since 1988, and according to the U.S. Department of Agriculture’s Economic Research Service, farmlands and ranches averaged $3,160 per acre in 2020. It is predicted that prices will go up this year and in the years to come.
Investing In Land
Recent estimates say that the farmland and ranch market in the United States is at a huge $2.5 trillion. With around 40% of land investments being in Texas, analysts say that it may be time to take a look at Texas land investing opportunities. The rationale is tied closely to the average age of American farmers: most of them are approaching 60, and soon, the lands that they hold will be sold to others. Industry analysts at Forbes add that 400 million acres of land will be sold in the next two decades because of the expected change of hands.
What is interesting about getting land in Texas is that buyers can invest in any type of property – from sea-level plains to rugged deserts to ranches that already have structures. Land, in general, is a tangible asset, and it cannot dwindle or be taken away like other assets. Whether a would-be ranch or farmland buyer uses the land for a certain number of years, or resells it when market prices go up, the conservative forecast is that the landowner will make a profit out of it.
Higher Demand For Farmlands
Farmlands will become more important in the coming decades. As the American population grows, the demand for food will rise, and to satisfy this need, the United States as a whole will need to secure more land for farming. Based on 2019 numbers, 65.2 pounds of poultry, 36.6 pounds of corn products, and 49.4 pounds of potatoes are available for every American per annum. By 2025, the chicken, corn and potatoes allocated per capita will be lower than in 2019 unless more land is farmed in the country. Those who own land when that time comes will benefit from this growth, as they can farm their land, lease it, or get into a crop sharing arrangement with a farming company. Owning farmland is also good for tax deductions since most farms have improvements that depreciate over time. This includes barns, shops and grain storage facilities.
Farmlands are unlikely investments that many have dismissed for years. For investors looking for something tangible, however, land is one of the best choices.
Photo by Laurent Gence on Unsplash
About the Author/s
The New Jersey Digest is a new jersey magazine that has chronicled daily life in the Garden State for over 10 years.
