Is Farmland Overvalued?

Tim Hammerich

News Reporter

Farmland has historically produced strong financial returns over the long term when you combine cash rent and appreciation. But is it overvalued? That’s a complicated question, says Farmland LP managing partner Craig Wichner.

Wichner… “All farmland is not the same. The value of farmland is based on the value of the crops that you grow on that land. If you switch farmland from growing commodity corn and that land is capable, is ideally suited to a different kind of crop that generates more cashflow: wine, grapes, blueberries, organic vegetables, anything else. You're going to significantly increase the cashflow and significantly increase the value of that land. So that's what we do from a value add strategy, but the baseline across the US for valuing farmland is 53% of US farmland grows two commodity crops: corn and soy. And so when people talk about is farmland over valued, they're just looking at corn and soy land, and what are the price trends relative to that. And I do think that corn land is overvalued, but I do think there's tremendous value in other sectors of this 3.1 trillion sector.”

Farmland LP is one of the top 15 farmland managers in the country and the largest focused on organic and regenerative farming.