Why Bill Gates Is Buying Up U.S. Farmland - YouTube

Bill Gates owns more land than all of the entire city of New

York. Jeff Bezos's land is double the amount clocking in at

420,000 acres. John Malone, the largest private landowner in

America, owns 2.2 million acres all by himself — a landmass

slightly smaller than the island of Puerto Rico. America is

enormous, yet 100 of the richest and largest private landowners

in America own 1.86% of all the land available in the United

States, the majority of their land being forests, ranches, and

farmland,

Some people like myself find farms beautiful and peaceful and

nice place to live.

Land is only getting more valuable. In the mid 1990s,

farmland was valued at less than $1,500 an acre adjusted for

inflation. By 2020, that number had grown to $3,160 an acre.

It's expensive. So if somebody is desiring land, it is

primarily people of wealth

who can afford it. Institutional capital is growing and it's

becoming a bigger piece of the market. It's about a $3 trillion

asset class when you look at the whole U.S.

However, not everyone is benefiting from the rise in

farmland prices,

It's going to continue to be harder for farmers, for

beginning farmers like myself, if prices continue to go up.

Everything's going up. Land is

critical. And it's it's the center of how we survive and

persist as communities and as people and farmland in the US is

something that we don't think about that often.

So why are the ultra wealthy investing in farmland? And what

impact will it have on the agricultural industry? In 2020,

Bill Gates made headlines for becoming the largest private

farmland owner in the U.S. He had accumulated more than

269,000 acres of farmland across 18 states in less than a decade,

shielding is purchased by buying up land through shell companies.

Why? It's a good economic investment.

Land has always been something that the ultra wealthy, people

of real means have have desired. It has great intrinsic value.

Beyond that, it is a limited resource. They're not creating

any more of it. And in fact, quite the opposite. We lose

farmland all the time. In the United States, we're losing

farmland at a rate of about 2,000 acres a day. It is not

only more and more important over time, but we have less and

less of it. So it's an asset with increasing value.

Farmland values began rising in 1988. And except for the single

year declines in 2009 and 2016, values have seen a steady

increase over the years. In the mid 1990s. farmland was valued

at less than $1500 an acre. By 2020, that number had grown to

$3,160 an acre.

It's not correlated with the stock market and other major

asset classes and so people like that diversification and it's

been a very stable performer. If you go back to COVID when the

stock market, you know, lost 10, 20, 30, 40% at the beginning of

COVID, you don't wake up and fin out that your farmlands worth 5

cents on the dollar the next da

Bill Gates is not the only one eyeing this investment. In 2011,

the top 100 largest private landowners owned about 32.7

million acres of land across the United States. Today, that

number has grown to over 42 .1 million acres, roughly th e size

of Florida and Connecticut combined. His farmland grows

onions, carrots and even potatoes that are used to make

McDonald's french fries. Thomas Peter five is the 17th largest

private landowner in the US owning 581,000 acres.

The reason I own lands in the Midwest is because these are

agricultural lands, right? And that's where the farms are,

right? I'm not farming in Boston.

If someone is really interested in acquiring a piece of land and

with farmers, once you own one parcel, you often want to own

the parcels that are adjacent to it. So if you can make those

purchases quietly, it might be a far more successful way to make

those purchases economically.

They are not one large transaction there are several

smaller pieces, and they were usually purchased at auction.

The vast majority of the land held by the largest private

landowners are forest, ranches, and farmlands located in states

west of the Mississippi River with few exceptions like Maine

and Florida.

When we think about farmland, we think about the Midwest being,

you know, the most fertile, most valuable farmland in the world.

And I liken it to being the Manhattan of farmland when you

look at Iowa, Illinois, those types of regions. But then when

you look at California, California and the Pacific

Northwest, up in Washington and Oregon and the Mississippi

Delta, those are some other major regions that you'll see a

lot of that major capital playing and that's where the

agricultural productivity is.

Today, the US Department of Agriculture estimates that 30%

of all farmland is owned by landlords who don't farm

themselves. Buyers often purchase land from farmers who

have owned it for decades. Many of whom are asset rich, but

maybe cash poor.

The way the market works is the land transitions primarily to

the people who will pay the most money for it. So a lot of

farmland gets purchased by non-farmers.

I think many farmers would like to see their land remain in

agricultural production, would like to sell it to another

farmer. But the economic realities for them are typically

that they've spent their life farming. Their retirement, their

equity is all in the land and tied up in selling land.

Institutional capital is growing and it's becoming a bigger piece

of the market. And it is part of that wealth transfer that's

happening when you look at the demographics behind who owns

farmland.

A profit can also be made by utilizing the land in numerous

ways. Approximately 39% of the 911 million acres of farmland

across the US is rented out to farmers, and 80% of that rented

farmland is owned by landlords who don't farm themselves.

For a lot of non-farmers who purchase property, they may then

hire somebody to farm the property for them. They may

lease the property to be farmed by others. And leasing is

actually often a very good strategy for farmers if it's a

well structured lease. What we're seeing right now on

Midwest cropland cap rates, it's

close to two and a half right now. And so you go buy a farm

and you put that cash rental lease in place, you're going to

be looking at about 2.5 percent return on your capital.

In some cases, there are tax incentives that incentivize

landowners to have farming occurring on their land. And

that is giving them a tax break for essentially for the work

that the farmers who are leasing from them are doing. But it can

in some cases, mean that t e farmers get a break on the lea

e price as well. The involveme t of private landowners has had

a significant impact on farmers n the United States. Some argue

n its support, suggesting that t e process of leasing farmlands h

s given new opportunities f r farmers who wouldn't normally

e able to afford to far

One of the biggest barriers for incoming farmers is the high

cost of farmland. And one way around that is if you can have a

good lease agreement with a landowner, you can farm

successfully without having that initial outlay of cost.

Young farmers are just as happy to lease the land because

whether you are young or old, it's a business, right? The

business of farming is becoming more and more specialized. There

are the people who concern themselves with what to plant.

There are the people who do the planting, to own the machines,

and work the machines. And then there are the people that market

the produce. So efficient farming is not one person that's

doing the whole thing.

Those who are against the idea worry that new farmers can't

compete with the likes of Bill Gates when it comes to acquiring

land.

People are swooping in that don't even live in this

community and land grabbing. They can live in California and

be able to purchase property here in our city just like that.

But somebody that lives here, that works here, that cuts the

grass next door because that lot hasn't been cut in a year, that

picks up the trash on the streets. They attempt to

purchase property and they have to go through hoops and hoops

and hoops.

With increasing competition on land and increasing values of

land, it really puts farmers in a challenging position because

they are not competing against individuals with the same income

as them.

I pursued the purchase of a 10 acre farm here a year ago this

month. And the owners ask for $1.75 million right for the

property in Kentucky. $1.75 million for 10 acres. I couldn't

afford that, you know, but a developer swoops right in and is

able to take that offer, you know, that opportunity right out

from under me, because they could.

And while leasing might sound like a good idea on paper, it

often puts farmers in a tricky spot.

The problem with leasing is that it really doesn't give farmers

the long-term security that they need to invest in their

business. If someone is saying, well, we're going to sell the

land, now, you have the option to stay or you could leave, that

can put farmers in a really tricky spot.

In some areas, the engagement of private landowners has also led

to soaring housing prices and cost of living.

When you look at these rural communities. There's definitely

winners and losers in terms of various parts of the country.

When you get into the Mississippi Delta, for instance,

where they've lost a lot of the tobacco industry or the cotton

industry that has evolved through the years, you've seen

some of these towns really struggle and they've lost their

industry and that's created a lot of poverty in some areas of

agriculture.

The jury is out on whether private landowners are a force

for good or bad for agriculture. But more farmland is expected to

make its way to the market in the future. When you

look at the demographics around who owns land, it's impractical

to think that farmers are going to buy every acre that

transitions over the next 20 years. We think in some form or

fashion, about 50% of the farmland in the US will turn

over over the next 25 years.

With this time, I would say that the jury is out on whether or

not large purchases by the ultra wealthy is a good or a bad

thing. But I honestly do believe that having large landowners

with the ability to look long term at the land and do what's

right by the land, and maybe be in a position to say lease the

land to incoming farmers at affordable rates, that could all

be positive. And so I'm hopeful it can be that.

There are fewer and fewer farmers with every US Ag Census

and there are a slight increase in the number of young farmers

but really at this point not enough to replace the farmers

who are leaving the industry. So we need more young farmers and

we really need to support them by making access to land

possible.