Company: LANDO
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001495240-25-000021
Chunk: 57

Company: GLADSTONE LAND Corp
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 57
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 annual rate of 3.0% over the same period.  Notably, over the past three years, food prices have risen by 11.3%, outpacing the overall CPI increase of 8.9%.  While high input costs remain a concern for farm operators, we believe these costs will be somewhat offset if food prices continue to match or exceed the inflation rate.

Interest Rates

The Federal Reserve initiated a brief rate-cutting cycle in September 2024—its first in over four years—lowering the benchmark federal funds rate by a total of 100 basis points before pausing in December 2024.  Since then, stronger-than-anticipated economic data, particularly in the labor market and consumer spending, combined with ongoing uncertainty regarding the scope and impact of newly-imposed tariffs, have reignited inflationary concerns.  As a result, the Federal Reserve has held rates steady, and U.S. Treasury yields have remained elevated, with the 10-year Treasury consistently trading above 4.4% in recent months.  Although earlier expectations called for multiple rate cuts in 2025, the timing and pace of any future monetary easing remain highly uncertain.  Continued volatility in the interest rate environment has sustained upward pressure on long-term financing costs, which may constrain our ability to pursue new farmland acquisitions on favorable terms.

Currently, over 99.9% of our borrowings are at fixed rates, and on a weighted-average basis, these rates are fixed at an effective interest rate of 3.39% for another 3.3 years.  As a result, our existing debt portfolio has been largely insulated from the rise in interest rates in recent years, and we believe we are well-protected against the potential for prolonged elevated interest rates and future rate increases.

Tariffs and Trade

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Ongoing trade tensions and the implementation of new tariffs continue to introduce uncertainty into U.S. agricultural exports markets.  Certain crops grown on our farms, including almonds and pistachios, are particularly exposed to these risks, as approximately 60% to 80% of U.S.-produced almonds and pistachios are exported annually.  In contrast, crops with strong domestic demand, such as fresh produce (including berries and vegetables), are generally less affected by trade-related disruptions.  

Although international trade developments have affected sentiment in export-oriented crop markets, pricing for almonds and pistachios continues to be primarily driven by fundamental supply and demand dynamics.  The USDA’s most recent Almond Objective Forecast projects a larger