Farmland Preservation: Benefits and Why It Matters

You could leave it fallow to appreciate in value. You could develop it for residential or commercial use. Or, you could convert it into farmland that has advantages for your community and your bottom line.

Let’s take a look at the importance and benefits of farmland and why you should seriously consider it as an investing strategy. 

Why is preserving farmland important? 

Farmland is becoming a valued asset, topping gold, bonds, or commercial real estate as the market tightens with development construction. In 2022 alone, the value of farmland increased by 14%. Together, these factors ensure a consistent positive return for farmland owners.  

What’s more, the number of farmers in the U.S. continues to decline, creating more opportunities for investors to purchase farmland and start generating additional income streams. In short, demand is high and supply of farmers is low—a perfect storm for economic opportunity.

5 key benefits of preserving farmland

While selling or developing land can seem financially lucrative, preserving farmland presents its own unique benefits.

1. Community benefits

Farmers are the backbone not only of the American economy at large, but also anchors of local communities, creating jobs and fostering economic stability. 

But no individual farmer can do this alone. It takes a community to create stability for neighboring farmlands, encouraging mutual support through farm business and mutual reliance. As farmers lose that support, their ability to support their communities declines.

By preserving farmland, you can help keep these communities alive—creating jobs, growth, and preserving the natural habitat of these lands.

2. Economic benefits

A single farm can provide an abundance of local job opportunities—from managers to field hands to machinery operators and more. Additionally, farms maintain jobs in secondary markets such as food processing, retail stores, and insurance. For an economy that is direly in need of jobs, landowners can build a stable economy through the positions they can offer.

Although many development projects promise economic growth, they aren’t the only economic driver out there. 

The data shows that this relationship between local agriculture and communities' influence is solid. With nearly 17 million agricultural positions in America, Pennsylvania alone provided nearly 500,000 jobs, demonstrating that farmed areas are major contributors to economic stability.

3. Property taxes

Maintaining local land use for farming reduces property taxes, as commercial development averages almost three times the tax cost as agriculture services taxes.

In reality, developments raise taxes in areas because they deplete local fiscal resources. Residential developments require roads, utilities, and local services such as fire and protection, which can quickly raise local taxes.

4. History & environment

Despite the fact that most people are now disconnected from agriculture, America was built largely on farms. Many farms are historical sites that have passed down a wealth of history and tradition.

Though many think it’s just sentiment, the rapid loss of farmlands also means the loss of the ability to educate the next generation of farmers. If there’s no land to farm, then the long-standing cultural practices and skills are lost with it. 

Additionally, sustainable farming benefits the local ecosystems' clean air, drinkable water, stable weather patterns, fertile soil, and flood protection.  

5. Financial benefits

Regardless of the positive effects on communities or the positive environmental impacts, landowners want to know if farmland preservation is profitable.

The short answer is yes.

Your ROI increases because you have a monopoly in a limited market, but there are other ways to increase profits beyond developing.

Learn more about why farmland is a good financial investment here.

How to establish multiple revenue streams for your farmland 

Landowning doesn’t mean you have to put all your eggs in the farming basket. There are multiple options for landowners to invest in that stream of income, other than just seasonal crops. 

When you own valuable assets like land, it makes sense to get as much for your asset as you can. No matter how big or small these streams of income are, they can have a big impact on your revenue.

Alternative crops

When you grow a variety of crops, your business is more likely to succeed, even if one crop fails. Depending on the crops you choose, you can either harvest them to sell directly or rent your land for pasture and grazing. 

Hunting

Rent the land to hunters. The profitability of this revenue stream depends on the size and quality of the land as well as the amount of game on it. At the very least, you should be able to earn enough to pay your property taxes alone with this additional income.

Agritourism

According to the USDA, US farmers earn more than $20,000 annually from agrotourism. Consumers are interested in learning where their food comes from, and if you can turn your operation into a full-blown experience, they’ll show up. Consider local community operations that bring in revenue and pique interest such as corn mazes, on-site farmer markets, etc.

Wind energy

If you own land that is big enough and in a good spot for large wind turbines, you might be able to rent it to wind developers or utility companies. Most of the time, these companies pay for the whole cost of installation, and you get paid for the energy you produce. Also, your tenant farmer can keep running their business because the turbine only takes up a small amount of land. 

Foraging 

If you have a lot of land that hasn't been developed, you could also try foraging to make extra money. You don’t have to plant or maintain these crops; the only investment on your part will be the labor it takes to forage. While this likely won’t be a highly profitable activity, it can be enough to impact your household’s bottom line in addition to your crops.

Tips to increase farmland value

Farmland can be the gift that keeps on giving to landowners who know how to preserve the quality of their land, raising its value for years to come in several ways.

Field & soil quality

Increase the value of your land by providing consistent soil profiles, which will only benefit the farmers who work on it. The higher the quality of the soil, the more likely your farmer will be to achieve a high yield. 

Water quality & irrigation

Water quality has a big effect on the crops you grow and can affect things like droughts, salty water problems, and more. 

The higher the quality of your land, the more you'll be able to sell or lease it for, and the more profits you'll be able to generate.

Passive income

Passive income, or money earned without direct labor, is coveted and can be hard to come by. A written rental agreement is a sure way to make money off of your land and a great chance for farmers. A well-run rental agreement can bring in money for years while keeping farmland in good shape for future generations. 

CommonGround gives you access to an online market where you can find farmers who want to rent your land. Put your land to work for you without having to work the land —get started today.