- Agricultural investing can offer both income and diversification benefits. Farmland has consistently performed well against stocks, bonds and real estate over the last 20 years. Direct farming operations and leases have provided a steady source of income return, while productivity gains and commodity price increases have driven appreciation gains. Further, low or negative correlations to other asset classes such as stocks and bonds make farmland a powerful diversifier in a mixed-asset portfolio.
- U.S. Agriculture may be of particular interest to investors, as the leading producer and a top exporter of some of the world’s most important commodities. The U.S. benefits from a large domestic market and a low per-unit production cost of several large commodities and has extensive, supply-constrained farm areas with favorable and diverse climatic and soil conditions. The U.S. is also home to innovative start ups focused on farming information technology, robotics and automation.
- An aging farmer generation, fractional family ownership structure and technological advances requiring sizable capital investment will naturally transition farmland holdings from individuals to institutions.