Wall Street Hoards Farmland Amid Inflation Woes

According to reports, Wall Street is actively buying up U.S. farms in the hopes that it will be a secure investment that will protect investors from inflation and uncertain economic situations.

Investment funds have amassed over a million acres of farmland in the United States, a relatively modest percentage of the 900 million acres in the country but substantial for the market when considering the rate of purchases. Some, including legislators, are worried that the sudden reduction in supply brought on by investors would make it difficult for the next generation of farmers to enter the market at current prices.

The number of acres owned by investment funds has climbed by 231 percent since the 2008 Global Financial Crisis. Over that time, the value of such assets has increased by $16.2 billion, or 800 percent.

Due to the ever-increasing need for food and the limits on land from population development, investors believe agriculture is a secure option amid rising inflation. By 2050, the United Nations expects the world to require 60% more food than it needs today to support its rising population.

With an annual increase of 3.2% in October, inflation stayed over the Federal Reserve’s 2% objective after hitting a peak of 9.1% in June 2022. To curb inflation, the Fed has increased the federal funds rate to a range of 5.25% and 5.50%, a 22-year high.

There has been a rise in the number of requests in the United States to prevent farms from being purchased by Chinese investors. Adding to their 353,140-acre holdings as of the end of 2020, Chinese investors spent $6.1 billion buying land in the United States in 2021.

The average age of farmers has increased from 56.3 years in 2012 to 57.5 years in 2017 due to land limits and rising prices, making it particularly difficult for young people to enter the farming business. The percentage of total output value contributed by large-scale farms, defined as those with annual gross earnings of over $1 million, increased from 35% in 2011 to 46% in 2020.