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Covid Real Estate Boom Crowds Out Aspiring Farmers

Big investors and cash buyers aren’t just squeezing working folks out of the housing market. They are also keeping regular folks, especially folks of color, out of independent farming:

“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,” [Gabriela Peyeyra, co-director, Land Network, Northeast Farmers of Color Land Trust] said.

…“COVID was the canary in the coal mine for land access,” said NEFOC’s [Stephanie] 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.

Another consequence is that more young and marginalized farmers could be pushed out of the farming business entirely. In a 2017 report, the National Young Farmers Coalition found that securing access to farmland was the most significant challenge facing young farmers (those under 40), based on a survey of 3,517 aspiring, current, and former farmers. The respondents also cited this as the most common reason for both leaving and not beginning farming [Greta Moran, “Beginning Farmers, Farmers of Color Outbid as Farmland Prices Soar,” Civil Eats, 2022.01.03].

Maybe aspiring farmers of youth and color could move to South Dakota, which, according to USDA data, still has the ninth-cheapest farmland in the country, despite tying with California for the eighth-highest percentage increase in farm real estate value from 2020 to 2021:

2021 Farm Real Estate Value USDA map
USDA: National Agricultural Statistics Service, “Land Values: 2021 Summary,” 2021.08.06, p. 5.

Farmland is a third cheaper in South Dakota than in New York and almost three-fifths cheaper than in Minnesota. But aspiring farmers can get more land for their money in Oklahoma, Kansas, North Dakota, Colorado, Nevada, Montana, Wyoming, and New Mexico… and I’d guess that at least half of those states offer longer growing seasons and better access to consumers eager to buy the fruits and vegetables of small-scale local agriculture.


  1. Nick Nemec 2022-01-10 09:09

    I’m not a fan of these state average maps for the value of farmland, there is a big difference between highly productive farmland in Lincoln or Union County and sagebrush pasture in Harding County. One is farmed land, is nearly Iowa and is as productive as Iowa; the other is sagebrush pasture and is nearly eastern Montana or Wyoming. The huge difference in productivity makes for a wide range in values and “average” is a rough, possibly meaningless yardstick by which make the point you are trying to make.

    Here in my small part of South Dakota (Hyde County) the land market has been dominated by one buyer. A former resident, he made his fortune in the restaurant industry as a franchisee of various big chains and is looking for somewhere to park his money. He is a bidder in every land auction and I’ve seen him only lose once and that was in a multi-parcel auction where he stopped bidding on one piece, in what appeared to be an effort to “punish” the bidder who drove him up on all the other parcels in that auction. He has bought thousands of acres of farmed land and native pasture, he removes all fences, breaks any native pasture, digs out all trees and burns any buildings. I’ve watched as he had giant cottonwood trees that posed no impediment to farming and had been a landmark for decades, next to a waterhole in the extreme corner of a field, dozed out and burned. He rents all his land to the same big farmer from the next county over, the big farmer has a large group of South African Afrikaners as seasonal farm help.

    No young ambitious farmer stands a chance in this market, I’ve watched young producers, or prospective producers bid against this buyer but they are forced to confront the hard economic facts that the combination of big money and big machinery are hard to overcome. There will be another land auction on Thursday this week, the results will be interesting to analyze, 560 acres that includes a mix of farmed land and pasture and a nice building site with newer buildings.

  2. Edwin Arndt 2022-01-10 09:48

    That is a good explanation about the fallacy of averages, Nick.

  3. WillyNilly 2022-01-10 10:05

    This is an interesting topic enhanced by the comment by Nick. I would like to learn more on how rural land ownership is changing and affecting communities, food production, and taxes. I think it helps to hear from those who are directly affected.

  4. jerry 2022-01-10 10:10

    Hmmm South African Afrikaners, well at least he keeps that white supremacy thingy going. Then we scratch our heads in wonder about how the hell a South African variant could come to South Dakota, duh.

    It looks like when you turn that native grassland over, you immediately qualify for huge government subsidy’s. Even on marginal land, the payoff is huge.

  5. Richard Schriever 2022-01-10 10:43

    As an idle activity, while driving back from Sious Falls to Lennox on township roads – as I am wont to do, I decided to count the number of actual farmsteads vs. “country-living” life-styler homes along a township road. I had not been on this road for some years and so wanted to get a flavor for what was trending. In a 9 mile stretch for every active farmstead (7), I counted 8 “rural residences” (56). I suspect, and will endeavor to confirm that a couple of those farmsteads only appeared to be such, and were in the process of being transitioned into commuter acreages. Note, this is on a couple miles off the “beaten path’ asphalted county roads. Strictly a graveled township road. This is not as a direct result of the pandemic but has been a long-term trend in Lincoln County. The farm stead I grew up on between Harrisburg and Tea has long been owned and operated by an Iowa farming corporation, as has much of the land around it. On the road between that homestead and Lennox (some of it paved) – a distance of 8 miles, I can count 3 actual farming homesteads that work the land on either side of that distance. There were once dozens – in my life-time.

  6. ABC 2022-01-10 10:44

    Even the ban on corporate farming doesn’t stop what Nick describes in Hyde County.

    The SD government is supposed to pass laws that are fair to everyone in South Dakota. The government is NOT supposed to be a cheerleader for raw Ultra Darwin winner eat all capitalism.

    We had a Populist rebellion here 1896 to 1902 or so. Maybe it is time for another one, this term a permanent rebellion!

  7. Richard Schriever 2022-01-10 10:49

    As to the impact on the communities, aside from the actual farms, Lennox for example, used to be a farm-centric community, with implement dealers, grain elevator, fertilizer, feed, seed and other farm service outfits, etc.. Today – it has exactly zero – none – not one business in town that is local agriculture centric. Sioux Steel makes livestock equipment and Wilson Trailer builds grain trailers, but those all get exported to dealers somewhere else. There is not one in town.

  8. RS 2022-01-10 13:35

    I’ve made this comment elsewhere but maybe not on this forum before. I am a farmer. I don’t believe our township of 54 sections is unique by any standards. One third of the total acres within our township are owned by people that do not live in our township, our county and most not even our state. The majority of this absentee ownership occurred by inheritance. Children of farmers, that left for better opportunities than staying in the community they grew up in, cling to the legacy of their parents or grandparents..The result is a dagger in the local communities vitality. Agriculture has always been a business where production activity profit is marginal, while land ownership grows wealth. This wealth in the past circulated within the local economy. One generation retired, sold their farm to either a family member or another local starter farmer. The sellers stayed in the community with their sale proceeds and spent them on a house in town, the local medical services, the local grocery store, hardware store, church etc. There truly was a multiplier effect of money changing hands within a community.
    Today that multiplier effect is gone. Absentee owners receive huge cash rent payments by competing farmers as they keep land off the market. Checks are written for hundreds of thousands of dollars that leave the community forever. Our own township estimate would be close to 2 million dollars. That could provide $50,000 jobs for 40 people locally. The real estate taxes that return are often less than 10% of what has been scooped out of the community.
    Now a true corporate enterprise, like Nick points out, has simply monetized efficiently the local destruction of any semblance of community. Communities are no longer needed to provide anything other than a zip code until even the post office is eliminated for lack of people. Don’t expect any of our policy makers to understand or change this inevitable fate for rural areas. A few retired Blue State Freedumb refugees are not going to save or contribute to these communities.

  9. John 2022-01-10 17:16

    Thanks Nick and RS. I’ve long written that the big, bigger, biggest agri-business economic model is not sustainable.
    That business model divides families, empties schools, then shops, then communities. If DeJoy were to remain as Postmaster one should expect massive post office consolidation. (That will be inevitable if the repubs elect a trumpian autocrat who practices government as a big business, not government as a service.)

    Also the land ownership inheritance model and law is an additional nuisance to public good order and discipline. Too often to “find the owner” one may have to hire a land agent or title office for sometimes the renter (who may be generations removed from the original renter), only knows his POC and where to send the checks. It’s no wonder that the SDGFP’s tripe to “ask permission to hunt or fish” is cruelly useless.

    If we use ‘back of the envelope’ estimates from RS’s township estimation and example . . . $2million per one township in opportunity cost loss to South Dakota towns, communities, counties multiplied by the 914 townships results in $1.28 billion in lost economic opportunity. Clearly, one should use caution on “averages and estimations”, yet a small study could narrow the range of the lost economic opportunity. That’s clearly not the full story or value for there are few townships in the Black Hills Fire Protection District and few active in extreme north and south west South Dakota. But these areas also have non-resident owners and renters. Yet, the reader gets the picture of the scope of South Dakota again shipping its wealth out of state. (Further, it’s likely somewhere in this analysis one could determine whether the trumpian ag-bribe checks went to the non-resident owners . . .)

  10. John 2022-01-10 17:50

    V-8 moment. Allow my amendment of my earlier comment.
    Inheritances are toxic to a democratic society. Inheritances allowed to run out of control create social classes free from risk taking and innovation.
    Geez even Omaha Warren knows this and is divesting his heirs of most of his wealth. Greed is a Biblical disease, one of the 7 deadly sins for reasons.

    Did you ever wonder why when the US intervened in 3d world autocratic dictatorships that among the FIRST THINGS ACCOMPLISHED was breaking up the large land holdings – vesting those and ownership to the people (lower classes) actually working that land – to invigorate economic opportunity.
    South Dakota practices creating inheritances into perpetuity via trusts and land holdings – fostering our autocratic futures. Hello McFly.

    Consider the experience of new middle class, well traveled immigrants to Canada, having escaped the malfunctioning UK class-based, self-serving society and government. They offer 11 reasons why they moved to Canada, jump to #11 at 13:45.
    My concern is the US and SD will continue swirling down the drain of poor governance, creating class systems, and stifling innovation and risk taking. Britain is a failed governance and economic model upon which to base a future US/SD democracy.

  11. John 2022-01-10 17:52

    *not base

  12. larry kurtz 2022-01-10 17:59

    Mr. Nemec is seeing it on the ground in real time. Location, location, location is nothing unless it comes with water, water and water.

  13. Porter Lansing 2022-01-10 19:15

    Sell when it’s high.
    Cell cultured beef, chicken, pork, and fish will be here within twenty years.

  14. mike from iowa 2022-02-26 10:31

    Plymouth Co iowa set new land sale record for farmland. 126 acres sold for $20,075.00 per for a total of over 2.5 million smackers.

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