Farmland is expected to experience a market correction in 2026 as appreciation rates cool and profitability pressures, water scarcity and regional disparities take hold. Institutional investors seeking assets with low correlations to broader markets should still consider farmland, but interest may wane in the intermediate term due to lower return expectations. With cap rates at record lows and weak operator profitability outlooks, there have been better times to invest. Most institutional capital has flowed into farmland for portfolio diversification and defensive characteristics rather than outsized returns.
Upside risks exist if investors continue bidding aggressively despite fundamentals, though downside risks — particularly tariffs and trade — remain significant. A base-case scenario anticipates a repeat of 2018, with USDA ad hoc support programs limiting major effects on land values and profitability. Yet, the U.S. agricult
