Key facts
- Farmland prices have surged globally, nearly doubling between 2008 and 2022 and tripling in Central-Eastern Europe.
- Investors are increasingly treating farmland as a financial asset, driving up prices and leasing land back to farmers.
- Carbon offset markets and 'green grabs' are contributing to large-scale land transactions.
- Despite rising food prices, global food shortages were not a factor in 2022; price increases were driven by speculation.
- Urbanization and infrastructure projects are consuming significant amounts of agricultural land worldwide.
Farmland is increasingly being treated as a financial asset rather than a source of food production, leading to soaring land prices globally. Between 2008 and 2022, land prices nearly doubled worldwide, and tripled in Central-Eastern Europe. In the UK, investment from pension funds and private wealth doubled farmland prices from 2010-2015, while in the US agricultural heartlands, prices quadrupled between 2002 and 2020.
Agricultural investment funds have grown tenfold since 2005, now regularly including farmland as a standalone asset class. US investors have doubled their stakes in farmland since 2020. Financial derivatives and private equity arms of commodity traders are enabling speculators to acquire land parcels and lease them back to struggling farmers, contributing to significant land price inflation.
'Green grabs' for carbon removal projects now constitute 20% of large-scale land deals, with carbon offset markets expected to quadruple in the next seven years. The International Panel of Experts on Sustainable Food Systems (IPES) notes that agricultural land is increasingly becoming a financial asset at the expense of small- and medium-scale farming. Narratives around food security, amplified by events like the COVID-19 pandemic and the conflict in Ukraine, have encouraged agribusiness and investors to secure land for export commodity production, leading governments to deregulate land markets.
However, despite sky-rocketing food prices, there was sufficient food globally in 2022 with no risk of shortages. Increased prices were attributed to speculation on food commodities and corporate profiteering. Land is also being repurposed for biofuels, green energy production, and extractive industries, with urbanization claiming prime farmland. Globally, up to 3.3 million hectares of farmland are projected to be lost to expanding megacities by 2030, with 80% of this loss occurring in Asia and Africa. Most U.S. farmers are expected to lose money this year, as landowners and investors prioritize profiting from land ownership over crop cultivation.