Billionaire NFL owner quietly buying up thousands of acres of Illinois farmland

Satellite View of Farmland in Champaign County

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Purchases of farmland by wealthy individuals and hedge funds have surged in recent years, but it is not a new phenomenon, farm economic experts said. They said farmland has been a popular investment for a long time because of its stability.

The LandReport, a magazine that provides news and insight on America’s landowners, recently estimated that Microsoft founder Bill Gates is the largest farmland owner in the U.S., owning about 242,000 acres. Gates owns 17,940 acres in Illinois, the report also states.  

In its review, the Midwest Center found that Baloo Enterprises LLC purchased:

• 1,926.3 acres of farmland in Douglas County for at least $19,694,096 between 2016 and 2019.
• 1,539.24 acres of farmland in Champaign County for at least $16,959,677 between 2015 and 2019.
• 1,402.28 acres of farmland in Coles County for at least $14,058,743 between 2015 and 2019.

Typically the land purchased by wealthy owners is rented out to farmers. A 2016 report by USDA showed that about 39% of farmland is rented. About 50% of farmland in Illinois is rented, according to the Illinois Society of Professional Farm Managers & Rural Appraisers.

Experts said farmland is an attractive investment due to its stability in returns. Todd Kuethe, an associate professor in farmland economics at Purdue, said that people who own farmland typically own it for a long period of time, so the value of the asset will appreciate over time and give a stable return. 

Kuethe also said farmland is currently more stable than a lot of other markets.

“What’s different is that as other investments have either gotten riskier or there’s a shortage of safe assets, farmland really holds the market position pretty well,” Kuethe said. “So I think it’s sort of the attractiveness of farmland relative to other investments.”

Bruce Sherrick, the director of TIAA Center for Farmland Research at the University of Illinois at Urbana-Champaign, said that the most common reason for selling farmland is to transfer the land after the owner passes away. He said that the heirs of the farmland receive the land at the current value, not the value it was originally purchased.

“I think a lot of farmers have an incentive to leave it in their estate until they pass away and then their heirs get it at a higher basis without paying capital gains,” Sherrick said.

This makes it difficult to acquire farmland, he said.

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“It’s a very thin market,” Sherrick said. “That does explain a lot of the difficulty in acquiring farmland because there’s not much changes of hands year-to-year. It’s a very long-term, held-til-death asset in many cases.”

Kuethe said that the purchases of farmland by wealthy investors is a bit of a double-edged sword for farmers, as some have expressed concerns about it bidding up the price of buying land.

“At the same time, about half of farmland in the Midwest is rented,” Kuethe said. “And so, as long as they’re not able to acquire enough land that they can sort of influence what the prevailing cash rental rate is, farmers can still access that through rental markets.”

Sherrick also said that this isn’t much of a problem as farmers are about the same proportion of purchasers as any other year.

“I don’t think there’s anything especially notable about who buys farmland, if an institutional buyer buys it or a wealthy individual buys it or a neighboring farmer buys it,” Sherrick said. “It’s still going to be used the same way in the following year and the returns to that asset are not influenced much at all by who happens to own it at a point in time.”