Fundamentals Turn In Favor Of Farmland Partners

Farmland Partners is deeply undervalued, trading at 70% of NAV despite strong farmland fundamentals and asset appreciation. FPI’s AFFO-based valuation misses substantial land appreciation, which is a major component of true economic earnings in farmland. Current farmland fundamentals—rising commodity prices, strong export trends, and robust crop insurance—support continued land value and income growth. FPI’s forward total return, including land appreciation, is positioned to exceed market averages, with potential for stock rerating as fundamentals are recognized.

Farmland is on a fundamental upswing as crop prices, export trends, farm insurance (ARC/PLC), productivity, and land values are moving favorably. Public stock investors have fixated on anemic rental income growth, leaving Farmland Partners ( FPI ) substantially undervalued relative to asset value. At current pricing, forward total return (inclusive of land appreciation) is positioned to be well above market averages. In this article we will discuss farmland fundamentals broadly and then move on to FPI-specific fundamentals.

Commodity prices are rising due primarily to 3 factors: Low yields in key growing regions Export volumes are ticking up Cost inflation Soybean yields are in a rather ideal spot in that they are strong in the U.S. and weaker in the rest of the world. U.S. soybean yields look to be 52.7 bushels per acre. USDA Brazil’s production is more of a mixed bag, with a large number of soybean-planted acres fully offsetting lower yields from El Niño and higher production costs. China’s corn and soybean crops this year are threatened by excessive heat and rainfall . While Brazil is our main competitor as a global exporter of soybeans, the weak domestic yields in China are leading to an uptick in U.S. export volume. Trading Economics reports: “US exporters have reported a series of soybean sales to China for the 2026/27 marketing year, including a fresh 333,000 metric ton purchase announced on August 26. The latest deal adds to several large sales earlier this month, with USDA reporting purchases of 488,000 tons on August 3, 238,000 tons on August 7, and another 244,000 tons on August 12th” This has helped soybeans rise to a healthy price. TradingEconomics Corn prices are also rising nicely on stronger export volume. TradingEconomics In this case, we are exporting to Mexico as per a TradingEconomics report citing USDA data: “Strong export demand is also underpinning prices, with cumulative shipments up 26% from a year earlier despite a recent easing in weekly shipments to 1.3 million tons. USDA reported a recent sale of 286,097 tons of US corn to Mexico, including 29,808 tons for 2026/27 delivery and 256,289 tons for 2027/28.”

Tighter immigration policies are reducing availability of farm labor and may be partially responsible for rising cost of agricultural labor. This is a topic that gets quite a bit of news coverage and may be causing excess bearishness on agriculture. However, labor is actually a rather small portion of farm expenses. Agricultural Economic Insights, using data from Purdue University, shows Indiana farmland expenses at just 9% from labor. AEI Nationally, this number is closer to 11%, but either way it is sufficiently small that a little bit of labor inflation doesn’t break the budget. The reason labor is such a small slice of the expenses pie is extreme growth in productivity per unit of labor. As a baseline, we can look at the broader economy, where labor productivity growth has been only moderate. FRED In contrast, farmland has seen 2 trends: Yield per acre has materially increased Labor per acre has materially decreased Farm output has increased steadil...