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Farmers Need More Investors to Buy Land for Sale in PA

Published: 09-07-21 Category: Investing

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

We see vast, rolling farmland for sale in PA.

This article was updated on 8/03/2023.

Approximately 18% of Pennsylvania's economy comes from its agriculture, responsible for about $83.8 billion in economic output and over 280,000 jobs. The Keystone State is home to 52,000 farms and 7.3 million acres of farmland and is a key producer of dairy products, peppers, apples, and mushrooms.

But over the last couple of years, farmers in Pennsylvania have learned that it's more cost-effective to rent Pennsylvania land than to purchase it. This is partly due to the rising costs of land per acre in Pennsylvania; in 2020, an acre of land for sale in PA cost about $7,100, a 1% increase over 2019's cost per acre of $7,030. Since 2011, the cost per acre of land for sale in PA has steadily risen.

As of Q4 2022, the average cost per acre of land for sale in Pennsylvania has risen to nearly $7,400 thanks to higher commodity prices that the state's farmers are being forced to absorb.

For investors with the capital to back it up, this opens up unique opportunities to expand on sources of rental income. One Pennsylvania farmer, when interviewed by WITF, said that he was currently renting about 350 acres from 25 different landlords.

On top of that, the state is now accepting applications for its Beginning Farmer Tax Credit Program, an initiative that makes it easier for young farmers to access land and rewards holders of agricultural assets who rent their land to beginning farmers.

What Is the Agriculture Like in Pennsylvania?

Pennsylvania is a worldwide leader in agriculture as well as a leader in snack food production. The state is known as the “Snack Food Capital of the World,” and its snack food production (pretzels, chips, and chocolate), alongside its 2,300 food-processing companies, generates over $5.1 billion in annual sales.

Pennsylvania is also known for its dairy production; its primary productions are ice cream, butter and cheese, and milk products, and it's one of the fastest-growing sectors in the state. PA also leads the nation in mushroom production, generating more than $330.7 million worth of mushrooms per year.

Countries all over the world seek out Pennsylvania cattle as prime breeding stock and the Pennsylvania Department of Agriculture places strict quality assurance guidelines on Pennsylvania's plants and animals.

Needless to say, there's plenty of business to be had for farmers as soon as they can get their hands on land for sale in Pennsylvania.

The 3 Best Counties to Buy Land for Sale in Pennsylvania

Overall, Pennsylvania's agricultural powerhouse of an economy ranks it at the 19th spot in the nation for agricultural production, thanks to the southeast region of the state and its cohort of high-yield counties.

Lancaster County: According to the 2017 Census of Agriculture, Lancaster County accounted for 19% of Pennsylvania's total agriculture sales with $1.5 billion produced. Its leading sellers included grain, tobacco, and vegetables.
Chester County: In 2017, Chester County led the state in total crop and nursery production. Nationally, the county ranked 25th in total crop sales, totaling $700 million.
Berks County: Another contributor to Pennsylvania's strong economic output in 2017 was Berks County, selling $550 million worth of agriculture products, 7% of the state's total.

You can use MyEListing.com's free search engine to browse & list land for sale in PA. Simply enter your simple or advanced search criteria and you're immediately presented with available lots for sale.

How to Lease Farmland to Farmers in Pennsylvania

Once you've chosen your farmland to invest in and achieved landowner status in Pennsylvania, you have to map out how you'd like to lease your land to farmers and the legalities that go with it. There are three primary types of leases to choose from: 1) Cash lease, 2) Flex Lease, and 3) Crop Share Lease.

Cash lease: This is the lease of choice for many farmers in Pennsylvania. It allows the tenant control over management decisions and incentivizes obtaining the highest possible profits. Tenants keep all windfall profits and pay rent in either a cash sum per acre or lump sum.
Flex lease: With a flex lease, rent can fluctuate with crop yield and/or market price, favoring the landlord with gains when market prices and/or crop yields increase; at the same time, the landlord loses when those yields and prices fall. The tenant must share their wins with their landlord when yield is strong and/or prices are high under a flex lease, as well.
Crop share lease: Finally, a crop share lease usually involves both parties sharing in costs and gains. The tenant usually pays the landlord a certain percentage of harvested crops and the landlord contributes to the cost of raising those crops. This type of lease is common in other regions of the country but not as widely used in Pennsylvania.

Although oral leases do make an appearance in Pennsylvania, it's best practice to keep your lease in writing. If, however, a landlord holds an oral lease agreement with a tenant and the tenant pays rent on time, stays true to the agreement, and the landlord collects the payments over the course of the agreement's term, it cannot be argued in court, then, that the lease is invalid.