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Despite surge in data center proposals, farmland competition in the Midwest still small

An ag economist says the threat of data center competition for farmland in the Midwest is minimal at the moment.

Tor Tolhurst with Michigan State University tells Brownfield the biggest data center projects proposed can span up to a thousand acres, but are usually smaller.

“It is adding some pressure, but so far with the scale of investments that we’ve seen, even if we double or triple the number of proposed projects, that direct impact is going to be relatively small in what we’re going to see in competition for acres,” he shares.

He says for every two percent decrease in farmland acreage, there’s roughly a one percent increase in long-term values.

“If there is competition for land and it’s swallowing up some of the other good land, it is going to make the land that is there in production more valuable for production,” he adds. “They’ll drive rents up, so hopefully on the margin that improves profitability that way.”

Tolhurst says there are about 50 active data centers in Michigan and 15 proposals under consideration, which need about 5,000 acres to be built. Illinois and Ohio have the most projects currently being tracked in the Midwest, nearly 200 each.

He says as some projects are located on brownfield sites, there will need to be a lot more farmland buying before there’s a meaningful effect on state-level average prices. 

Brownfield interviewed Tolhurst during the recent MABA Winter Conference in Lansing.