Permanent Crops vs Row Crops
Definition
Row crops (annual crops) such as corn, soybeans, wheat, rice and cotton are planted and harvested every year, so the land can switch crops, tenants or management each season. Permanent crops are trees, vines and bushes, such as almonds, pistachios, walnuts, citrus, avocados and wine grapes, that are planted once and bear for many years. Farmland Partners' 2025 Form 10-K puts the difference plainly: annual crops 'are planted every year whereas permanent crops, such as trees, bushes and vines, are planted and bear crops over multiple years.' For an investor the distinction changes almost everything: the cost of getting the land into production, how long income takes to start, how dependent the land is on irrigation water, how easily it can change crops, how long leases run, and what the land is worth if the plantings are lost.
Why it matters
Fractional farmland platforms sell both kinds of land, often under the same headline yields, and they are different investments. Row crop land in the Corn Belt is mostly a land bet with a modest cash rent; its value rests on soil and location, and it can be re-leased each year. Permanent crop land is part land and part a depreciating biological asset whose value depends on the age and health of the trees and on water that may be curtailed or regulated. An orchard near the end of its life, or one in a basin facing pumping limits, can be worth much less than the purchase price implied by current crop revenue. Underwriting permanent crop land means valuing the plantings and the water separately from the dirt.
Common misconceptions
- •Higher revenue per acre is not higher return. Establishment cost, depreciation of the plantings and water risk come out of it.
- •An orchard is not a permanent asset. UC Davis assumes a 25-year life for almonds, and many orchards are removed earlier.
- •Permanent crop land cannot switch crops quickly. Replanting means removal, years without income and a new establishment cost.
- •Crop revenue is not land rent. On many permanent crop farms the owner or an affiliate farms directly and bears the operating risk.
- •Row crop land is not riskless. Its income is lower and its value depends more on land prices.
Technical details
How the two compare
Planting: row crops every year; permanent crops once per orchard or vineyard life.
Time to income: row crops the first season; almonds no crop for two years and a full crop from about year five (UC Davis 2024).
Who owns the planting: the landowner, usually, on permanent crop land (Farmland Partners 2025 Form 10-K).
Lease terms: three years for row crops and up to seven for permanent crops at Farmland Partners.
Flexibility: row crops can follow prices; permanent crops are locked in until removal.
Water: most permanent crops in the western states depend on irrigation; much Corn Belt row crop land is rain-fed.
Worked example: Farmland Partners' portfolio
About 60% of the owned portfolio by value grows primary crops such as corn, soybeans, wheat, rice and cotton, and about 40% specialty crops such as almonds, pistachios, citrus, avocados, strawberries and edible beans (December 31, 2025).
Permanent plantings carried at $28.0 million at cost at the end of 2025 ($42.5 million a year earlier), depreciated over 13 to 40 years.
Its taxable REIT subsidiary farmed 1,845 acres of permanent crop land in California directly.
Its largest tenant, 33.4% of 2025 rental income, is a California farming entity with 'numerous permanent crop leases'.
Checklist for permanent crop land
Age, variety, rootstock and spacing of the planting, and years of remaining productive life.
Water sources, rights, district allocations and the basin's groundwater plan.
Who owns and insures the planting, and who pays for replacement.
Whether the income is rent or crop revenue, and who bears the farming risk.
The value of the land without the planting.
How investors apply the term
Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.
The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.
Frequently asked questions
- Is permanent crop farmland riskier than row crop farmland?
- Farmland Partners, which owns both, says so in its 2025 Form 10-K: 'Investments in farmland used for permanent/specialty crops have a higher risk profile than farmland used for annual row crops.' A permanent planting lost to drought, flooding, fire or disease takes years to replace, and the farm cannot easily switch to another crop when prices fall. Higher revenue per acre is the compensation for that risk.
- How long does a new orchard take to produce income?
- UC Davis's 2024 almond cost study for the north San Joaquin Valley assumes no crop in years one and two, 500 pounds of kernels per acre in year three, 1,000 in year four and 1,900 in year five, against a lifetime average of 2,200. It puts the accumulated net cash cost to establish the orchard through year three at $17,292 per acre.
- Who pays for the trees in a farmland lease?
- Usually the landowner. Farmland Partners says it is 'generally responsible for plantings and associated improvements on our permanent crop farmland while our tenants will be responsible for all operating costs.' On row crop land the landowner provides bare land and the tenant plants each year.
- Do permanent crop leases run longer?
- Typically. Farmland Partners reports lease terms of three years for row crops and up to seven years for permanent crops, reflecting the longer investment the tenant makes in managing the planting.