United States farmland values historically have experienced gradual appreciation. While a period of dramatic appreciation of the 1970s and the subsequent correction in the 1980s interrupted this stable growth, the 1990s and early 2000s showed a return to the gradual appreciation trend.

Strong farm income levels during the 1990s, along with lower more sustainable debt levels relative to the 1980s, brought the U.S. farm sector through a full recovery. In the late 1990s, the slowdown in the Asian economies affected exports and reduced commodity prices, putting pressure on farm income levels. Recently, in the early 2000s, growth in foreign economies and a declining dollar have boosted export values and farm income. The strong income has supported land value increases.

It is also important to note that the U.S. farm sector's debt load reflects the financial stability of the farm sector. Both the debt-to-equity and debt-to-asset ratios are near 30-year lows, a result of reasonable debt usage by farmers in the 1990s and early 2000s.

To fully understand the strength of the asset class, farmland analysis should include a review of long-term farmland fundamentals. We analyze long-term fundamentals when researching crop types and regions for investment.