Farmland speculation makes it harder for smaller farms to compete because the increased demand from deep-pocketed financial firms is driving up the price of land beyond what anyone in the local community can pay. At the same time, the agribusiness model that the financial companies are supporting is pushing farmers to produce more and more, which actually drives down the prices that farmers are paid for their crops. This is particularly the case with small-scale peasant farmers in the Global South who have almost no cash and rely on the land for their livelihood. But it is also a serious problem for farmers in the U.S.
In the U.S., speculation has been linked to the rising price of farmland over the past few years. According to a 2014 study about the financialization of farmland, “of the farmland fund managers interviewed, almost all expected at least 50 percent of their fund’s total internal rate of return (IRR) to come from land appreciation, and some expected substantially more.”
The primary impact of speculation, then, is to make land so expensive that family farmers cannot afford it, leaving many new or beginning farmers — to say nothing of the millions of landless farmworkers — without the ability to own land. Because of “Get Big or Get Out” agriculture policies, which increase the costs of farming but decrease farmers’ earnings, many family farmers are forced to rent additional land to produce more crops on more acreage. This compounds the problem of skyrocketing land rents due to increased farmland speculation. Additionally, while rising land prices would supposedly benefit farmers who own their land, the National Family Farm Coalition cites cases in which banks have encouraged family farmers to sell their farms instead of providing them with loans.