Des Moines Land Expo delivers cold comfort to farmland investors

Reduced political programming at the 17th Peoples Company Land Investment Expo could not dislodge policy from the center of discussion amid a cloudy outlook for the US ag sector.

Politics is hard to avoid on a January trip to Iowa during an election year.

Nevertheless, this year’s Land Investment Expo in Des Moines, hosted by farmland services provider Peoples Company, featured less overtly political programming than in previous years.

Whereas the event has in the past served as an informal rural introduction for presidential hopefuls including Donald Trump in 2015 and Vivek Ramaswamy in 2023, this year’s Expo was sandwiched between two massive snowstorms that limited turnout and included no mention of the Iowa caucuses scheduled to take place less than a week after the January 9 event.

Regardless of whether the 17th annual Expo’s tone and scheduling suggested a deliberate backing away from the center of the maelstrom driving US national politics, the content of the Expo’s programming itself highlighted the degree to which political risk and policy uncertainty continue to cloud medium term projections.

In the first main stage address, Willis Sparks of the Eurasia Group described a complicated geopolitical backdrop characterized by multiple active military conflicts and  acknowledgment that his consultancy judges China’s President Xi Jinping to be the world’s most powerful individual.

Other panels included an overview of recent scrutiny of foreign investment in US farmland and calls for reform of disclosure requirements imposed by the 1978 Agricultural Foreign Investment Disclosure Act; a video address by USDA Undersecretary Robert Bonnie addressing skepticism regarding government programs and multiple discussions of how environmental regulations in California are shaping the agricultural investment environment, which featured a manager from Sixth Street Agriculture, among others.

During a main stage interview with Expo moderator and Land Report editor Eric O’Keefe, California State Representative James Gallagher described how his state’s farmers are under pressure from environmental regulations and growth of government he sees as relevant elsewhere.

“Quite honestly, I think we see a very global effort to really minimize farming; to sort of squeeze it. They are hardly making any bones about it,” he said. “A lot of it has been focused on livestock, but it is starting to come after our crops as well.”

Several participants described 2023 as the year when a long-anticipated plateau in farmland transaction volumes and valuation highs finally materialized. Policy has played a key role in creating conditions for the recent farmland rally – including market facilitation payments to counteract the impacts of the Trump Administration trade war and direct payments to farmers and consumers in the wake of covid-19 – and the potential impact of green energy policy ambitions emerged as a focus across panels at the Expo.

University of Illinois professor Bruce Sherrick described the changing nature of government support for agriculture and the sector’s inclusion within broader spending programs aimed at combatting social inequality, protecting the environment and encouraging more renewable energy use. While there are a variety of potential positive outcomes from current debates around issues including carbon credits and related infrastructure spending for ag, he added, much uncertainty remains.

“I’m as confused as I’ve ever been about where farmland markets are going, I’m still very, very optimistic in the long-run. I just don’t know what to do with the next five years in my mind,” said Sherrick. “Very positive in some sense, but if we get a five percent pullback, I won’t be surprised. If we get a five percent run-up, I won’t be surprised.”

Iowa’s outsized influence within national politics and agriculture are important components of the state’s identity. At a time when a swirl of domestic and international forces conspires to raise the possibility of fundamental change in each, few participants likely came to the Land Investments Expo with high hopes of much certainty.

Instead, most probably expected what they received: a full expression of the array of complex issues investors in agricultural real assets must consider in a market facing several crossroads.