Best States To Buy Farmland | askBAMLand

As someone who is interested in buying farmland in the United States, you may be wondering which state is the best for pursuing your investment.

Montana, Kansas, and Oregon have rich soil but are known for cold winters that can complicate farming. Whereas states such as California have exceptional farming conditions with high land prices. Buyers need to consider their farming goals to determine which states suit their needs best.

We've done extensive research on the best states to buy farmland, analyzing factors such as profitability, cost of operation, infrastructure, and availability. We've also looked at the unique features of each state that make it a good or bad choice for farmland investment. With this information, you'll be able to make an informed decision about where to invest in farmland.

Key Takeaways

  • Consider location, climate, water access, infrastructure, & labor when buying farmland.
  • States like Montana, Kansas, and Oregon have rich soil but cold winters.
  • States such as California have exceptional farming conditions with high land prices.
  • Different crops have varying levels of profitability and demand for each state.
  • Carefully assess the growing conditions for cash crops in any farmland state you choose.

Table of Contents

Understanding Farmland as an Asset

As someone who is interested in investing in farmland, it's important to understand why it's considered a valuable asset class. Farmland is a tangible asset that has been proven to provide solid returns over time.

In fact, according to Forbes, farmland assets have averaged over 10% in returns for the last 47 years. This makes it an attractive option for investors looking for long-term growth.

Investment Diversification

One of the reasons why farmland is such a great investment is because it offers diversification benefits. By investing in farmland, you are spreading your risk across different sectors.

This is because farmland is not only used for agriculture, but also for other purposes such as renewable energy and real estate development. This means that even if one sector is not performing well, you can still benefit from the other sectors.

Passive Income

Another advantage of investing in farmland is that it can provide passive income. This is because farmland can be leased out to farmers who will use the land to grow crops or raise livestock.

As the owner of the land, you will receive rental income without having to do any work. This makes it an attractive option for investors who are looking for a stable source of income.

Annual Returns

When it comes to ROI potential, farmland can be a great investment. According to the National Council of Real Estate Investment Fiduciaries (NCREIF), farmland has outperformed real estate and the Russell Stocks Index 3000 in terms of average annual returns.

This means that investing in farmland can provide higher returns than other asset classes.

Key Farmland States to Consider

As I researched the best states to buy farmland, I found that there are many factors to consider when making a decision. Here are some of the key farmland states and their pros and cons.

Montana

Montana
Montana

Montana is one of the best states to start a farm or ranch according to Lawnstarter. With agriculture being its biggest industry, Montana offers a lot of potential for farmers.

Kansas

Kansas
Kansas

Kansas is another state that is great for farmland. It has a low cost of living and low property taxes, which can save farmers a lot of money. The state also has a lot of infrastructure in place to support agriculture.

The weather in Kansas can be unpredictable, with droughts and tornadoes being common.

Oregon

Oregon
Oregon

Oregon has a lot of advantages for farmers, including a mild climate and access to water. The state is also known for its organic farming practices and has a strong market for organic produce.

However, the cost of land in Oregon can be high, which can be a barrier for some farmers.

Texas

Texas

Texas is a large state with a lot of farmland. The state has a warm climate and long growing season, which can be beneficial for farmers.

The cost of living in Texas is also relatively low. However, the state is prone to droughts, which can be challenging for farmers.

Kentucky

Kentucky
Kentucky

Kentucky is a state that is known for its fertile soil and abundant water supply. The state also has a lot of infrastructure in place to support agriculture. However, the state is prone to flooding, which can be a risk for farmers.

Florida

Florida

Florida is a state that is known for its warm climate and long growing season. The state also has a lot of infrastructure in place to support agriculture. However, the state is prone to hurricanes, which can be a risk for farmers.

Iowa

Iowa
Iowa

Iowa is a state that is known for its fertile soil and abundant water supply. The state also has a lot of infrastructure in place to support agriculture. However, the state is prone to flooding, which can be a risk for farmers.

California

California
California

California is a state that is known for its diverse agriculture industry. The state has a warm climate and long growing season, which can be beneficial for farmers. However, the cost of land in California is high, which can be a barrier for some farmers.

Tennessee

Tennessee
Tennessee

Tennessee is a state that is known for its fertile soil and abundant water supply. The state also has a lot of infrastructure in place to support agriculture.

Keep in mind that the state is prone to flooding, which can be a risk for farmers.

Mississippi

Mississippi
Mississippi

Mississippi is a state that is known for its fertile soil and abundant water supply. The state also has a lot of infrastructure in place to support agriculture.

Buyers considering Mississippi should note that the state is prone to flooding, which can be a risk for farmers.

Wyoming

Wyoming
Wyoming

Wyoming is a state that is known for its open spaces and low population density. The state also has a low cost of living and low property taxes, which can save farmers a lot of money.

However, the state has a short growing season, which can be challenging for farmers.

North Dakota

North Dakota
North Dakota

North Dakota is a state that is known for its fertile soil and abundant water supply. The state also has a lot of infrastructure in place to support agriculture.

That said, the state is prone to flooding, which can be a risk for farmers.

Oklahoma

Oklahoma
Oklahoma

Oklahoma is a state that is known for its fertile soil and abundant water supply. The state also has a lot of infrastructure in place to support agriculture.

Despite its fertile soil, Oklahoma may experience droughts, which can be challenging for farmers.

South Dakota

South Dakota
South Dakota

South Dakota is a state that is known for its open spaces and low population density. The state also has a low cost of living and low property taxes, which can save farmers a lot of money.

However, the state has a short growing season, which can be challenging for farmers.

Colorado

Colorado
Colorado

Colorado is a state that is known for its diverse agriculture industry. The state has a warm climate and long growing season, which can be beneficial for farmers.

Keep in mind that Colorado is prone to droughts, which can be challenging for farmers.

New Mexico

New Mexico
New Mexico

New Mexico is a state that is known for its warm climate and long growing season. The state also has a lot of infrastructure in place to support agriculture.

Much like with many US states, New Mexico does experience droughts.

Georgia

Georgia
Georgia

Georgia is a state that is known for its diverse agriculture industry. The state has a warm climate and long growing season, which can be beneficial for farmers.

Best Value Farmland States

As someone interested in buying farmland, I wanted to know which states offer the best value for money. So, I conducted a comparative analysis of farmland prices across different states.

Affordable Farmland States

After analyzing the data, I found that the following states offer some of the most affordable farmland in the country:

  • Nebraska
  • Kansas
  • South Dakota

For example, in Nebraska, the average price per acre of farmland is $2,650, while in California, it's $7,200 per acre.

But, when it comes to affordability, it's not just about the price per acre. You also need to consider the productivity of the land. After all, you don't want to buy cheap farmland if it's not going to produce a good yield.

Crop Yield States

That's why I also looked at the average crop yield per acre across different states. I found that the following states have some of the highest crop yields per acre in the country:

  • Iowa
  • Illinois
  • Nebraska

For example, in Iowa, the average corn yield per acre is 202 bushels, while in California, it's only 162 bushels. So, while farmland in California may be more expensive, you may be able to get a better return on investment in states like Iowa and Nebraska.

Unique Features of States for Farmland Buying

When it comes to buying farmland, there are several unique features to consider in each state. Here are some of the most notable features.

State Unique Features Ideal for
Corn Belt States Fertile soil, high crop yields, low cost of living Growing crops like corn, soybeans, and wheat
Mountain States Diverse landscape, open land for grazing livestock, low cost of living Ranching and small farms
Mississippi River States Fertile soil, abundant water supply, low cost of living Growing crops like rice and cotton
Grand Canyon State Unique landscape, warm climate, low cost of living Growing crops like citrus and pecans
Diverse Landscape States Diverse landscape, strong economy, low cost of living Growing a wide range of crops
Industries and Parks Strong industries and parks Supporting farming operations

Corn Belt States

States in the Corn Belt, such as Iowa and Illinois, are known for their fertile soil and high crop yields.

These states are ideal for buying farmland if you're looking to grow crops like corn, soybeans, and wheat. Additionally, the low cost of living in these states makes them a great option for those looking to start a small farm.

Mountain States

Mountain states like Montana and Wyoming offer a diverse landscape that is perfect for ranching.

These states have plenty of open land for grazing livestock, and their mountainous terrain provides a natural barrier that helps protect the animals from predators.

Additionally, these states offer a low cost of living and a strong sense of community, making them a great option for those looking to start a small farm or ranch.

Mississippi River States

The states along the Mississippi River, such as Louisiana and Mississippi, are known for their fertile soil and abundant water supply.

These states are ideal for growing crops like rice and cotton, and their proximity to the river makes it easy to transport goods to market.

Additionally, these states offer a rich cultural history and a low cost of living, making them a great option for those looking to start a small farm.

Grand Canyon State

Arizona, also known as the Grand Canyon State, offers a unique landscape that is perfect for growing crops like citrus and pecans.

The state's warm climate and abundant sunshine make it ideal for growing these crops, and its proximity to major markets makes it easy to transport goods to buyers.

Arizona offers a low cost of living and a strong sense of community, making it a great option for those looking to start a small farm.

Diverse Landscape States

States like California and Texas offer a diverse landscape that is ideal for growing a wide range of crops.

These states have everything from fertile valleys to arid deserts, making them a great option for those looking to grow a variety of crops. These states offer a strong economy and a low cost of living, making them a great option for those looking to start a small farm.

Industries and Parks

In addition to their farmland, many states offer a variety of industries and parks that can help support your farming operation.

For example, states like Michigan and Wisconsin have a strong dairy industry, while states like Colorado and Utah have a thriving outdoor recreation industry. Additionally, many states have national parks and other protected areas that can help preserve the natural beauty of your land.

Factors to Consider When Buying Farmland

When I was looking to buy farmland, I knew that I had to consider several factors before making my final decision. Here are some of the most important things to keep in mind:

Price and Budget

One of the first things to consider when buying farmland is the price. You want to make sure that you are getting a good deal and that you can afford the land.

It's important to set a budget and stick to it. You don't want to overpay for the land and end up in debt.

Location and Climate

The location of the farmland is also an important factor to consider. You want to make sure that the land is in a good location and that the climate is suitable for the crops that you want to grow.

Some areas may have better soil quality, while others may have a more favorable climate for certain crops.

Water and Infrastructure

Access to water is essential when it comes to farming. You want to make sure that the land has access to a reliable water source.

Additionally, you want to make sure that the land has the necessary infrastructure, such as roads and utilities, to support your farming operation.

Most sustainable farming practices will ensure a safe and reliable water source, but you should always confirm this during your inspection.

Employment and Population

The availability of labor is also an important consideration. You want to make sure that there is a sufficient pool of workers in the area who are willing and able to work on your farm.

Furthermore, you want to make sure that the local population is large enough to support your farming operation.

Adopting sustainable farming practices and encouraging community-supported agriculture is a great way to mitigate some of your employment costs and attract customers.

Cost of Living and Real Estate

Finally, you want to consider the cost of living in the area and the real estate market. You want to make sure that you can afford to live in the area and that the real estate market is stable.

Additionally, you want to make sure that you can sell the land for a profit if you decide to do so in the future.

Understanding the Farmland Market

As someone who wants to buy farmland, it's important to understand how the market works. The farmland market is influenced by a variety of factors, including the economy, USDA programs, interest rates, labor availability, and real estate trends.

Economic Impact

The state of the economy can have a significant impact on the farmland market. When the economy is strong, demand for farmland tends to increase, which can drive up prices.

On the other hand, during a recession, demand for farmland may decrease, leading to lower prices.

Government Incentives

USDA programs also play a role in the farmland market. Programs like the Conservation Reserve Program (CRP) and the Environmental Quality Incentives Program (EQIP) can provide incentives for farmers to retire land or implement conservation practices, which can impact the availability of farmland for sale.

Interest Rates

Interest rates can also affect the farmland market. When interest rates are low, borrowing money to purchase farmland can be more affordable, which can drive up demand and prices.

Conversely, when interest rates are high, demand for farmland may decrease, leading to lower prices.

Labor

Labor availability is another important factor to consider. In areas where labor is scarce, farmers may have difficulty finding workers to help them operate their farms.

This can lead to lower demand for farmland in those areas.

Real Estate Trends

Finally, real estate trends can impact the farmland market. When real estate prices are high, some landowners may choose to sell their farmland to developers, which can reduce the amount of farmland available for sale.

On the other hand, when real estate prices are low, some landowners may hold onto their farmland, which can increase the supply of farmland for sale.

Crops and Their Impact on Farmland Value

When looking to buy farmland, it's important to consider the types of crops that can be grown on the land. Different crops have varying levels of profitability and demand, which can greatly impact the value of the farmland.

Corn

For example, corn is one of the most widely grown crops in the United States and is used for a variety of purposes such as food, ethanol, and animal feed.

As a result, farmland that is suitable for growing corn is often in high demand and can command a premium price.

Wheat

Wheat is another commonly grown crop in the US, used primarily for human consumption.

While wheat prices can be volatile, farmland that is well-suited for growing wheat can still be a good investment, especially if the land is located in an area with a strong demand for wheat.

Honey

Honey production is another potential source of income for farmland owners. Bees can be kept on farmland to pollinate crops and produce honey, which can be sold for a profit.

However, it's important to note that not all farmland is suitable for beekeeping, so it's important to do your research before investing.

Cotton

Cotton is a crop that is primarily grown in the southern US and is used for clothing and other textiles.

Farmland that is suitable for growing cotton can be quite valuable, especially if it is located in an area with a strong demand for cotton.

Soy Beans

Soybeans are another widely grown crop in the US, used primarily for animal feed and human consumption.

Like corn, farmland that is suitable for growing soybeans can be in high demand and can command a premium price.

Property Tax Exemptions and Farmland

When it comes to buying farmland, property taxes can be a major concern. Fortunately, many states offer generous property tax exemptions to help ease the burden on farmers.

As someone who is looking to buy farmland, I have been researching the best states for property tax exemptions and here is what I have found.

New York

New York offers an agricultural assessment program that can provide significant property tax savings for eligible farmland owners.

However, it is important to note that there are certain restrictions and requirements that must be met to qualify for this exemption.

For example, if farmland that has received an agricultural assessment is converted to a non-agricultural use within five years of last receiving an agricultural assessment, a payment equal to the difference between the taxes paid on the land's assessed value and the taxes that would have been paid on the land's market value will be required.

Texas

In Texas, agricultural land is appraised based on its productive value, which is typically lower than its market value.

This can result in significant property tax savings for farmers on their state income tax. Additionally, Texas offers a number of other property tax exemptions that may be applicable to farmland owners, such as the homestead exemption and the disabled veteran's exemption.

Iowa

Iowa offers a number of property tax credits and exemptions for farmland owners, including the agricultural land credit, the forest reserve credit, and the family farm credit.

These programs can provide significant property tax savings for eligible farmers.

Montana

Montana offers a property tax exemption for agricultural land that is actively used for agricultural purposes.

This exemption can provide significant property tax savings for farmers, as it can reduce the taxable value of the land by up to $20,000.

How to Find and Buy Farmland

As someone who has bought farmland before, I know that finding the right piece of land can be a daunting task. Here are a few tips to help you find and buy the farming land of your dreams.

Step 1: Determine your Budget

Before you start your search, you need to determine how much you can afford to spend on farm land.

This will help you narrow down your search and ensure that you don't waste time looking at properties that are outside of your price range.

Step 2: Research the Best States to Buy Farmland

Some states are better than others when it comes to buying farmland. Look for states that have a good climate, fertile soil, and a low cost of living.

Step 3: Search for Land for Sale

Once you have determined your budget and the states you are interested in, start searching for land for sale.

The best state to buy farmland can ultimately vary depending on your long-term goals, so consider your options carefully.

You can use websites like LandsofAmerica.com or LandHub to find attractive and cheap farmland properties that match your criteria.

Your options will greatly vary from large corporate farms to small family owned farms. If you are looking for a community of farmers to join, consider checking out some developed farmland communities.

Step 4: Visit the Properties

Once you have found a few properties that you are interested in, it is important to visit them in person.

This will give you a better idea of the condition of the land and any potential issues that you may need to address. If you have the option, always avoid parcels that are in poor or mediocre condition.

Step 5: Get a Loan

If you need financing to buy the farmland, you will need to get a loan. Shop around for the best rates and terms, and make sure that you understand all of the terms and conditions of the loan before signing any paperwork.

Step 6: Negotiate the Price

Once you have found the perfect piece of farmland, it is time to negotiate the price.

Don't be afraid to make an offer that is lower than the asking price, but be prepared to compromise if the seller is not willing to budge. If you are negotiation for cheap land, you should not have any issues getting a reasonable price.

Buying farming land in rural areas can be particularly affordable due to the location.

Step 7: Close the Deal

Once you have agreed on a price, it is time to close the deal. Make sure that all of the paperwork is in order and that you understand all of the terms and conditions of the sale before signing anything.

Buying farmland can be a complex process, but with a little bit of research and preparation, you can find the perfect property for your needs.

About THE AUTHOR

Brittany Melling

Brittany Melling

Brittany has been in the land business since 2020 when the world was starting to shut down. Since then, we’ve sold to dozens of people from ATV weekend warriors to camping enthusiasts to retired truck drivers. Our inventory spans mostly in the western United States. We’ve been trained by experience, land acquisition courses, and hundreds of hours meeting with county assessors and clerks, zoning officials, realtors, and land investors. We’ve answered hundreds of questions from people regarding the buying and use of land.

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