Farmland is an Attractive Investment
Farmland is an asset class that has attracted significant investor interest because of its unique investment characteristics and ongoing price appreciation. Historically, farmland has a low correlation to equity and fixed income markets, has provided inflation protection, and has generated stable value appreciation. Farmland is a key resource in the agricultural supply chain, making it a tangible, finite resource like oil and other commodities.
Investing in farmland provides attractive returns. Between 1970 and 2009, farmland values, according to USDA data, have outperformed both domestic stocks and bonds on an annualized basis, returning an annual average of 10.25% v. 6.24% for the S&P 500 and 7.3% for 10-year Treasuries.
Farmland prices have risen faster than inflation. Between 1970 and 2009, the U.S. Consumer Price Index rose an average of 4.36%. As a result, we believe farmland investments offer a degree of inflation protection.
Value-Add vs. Buy and Hold
Value-add is the smart way to invest in farmland.
As one example, through our proprietary investment process, we identify underutilized land with excellent water resources. We improve the land, focusing on high-tech irrigation infrastructure improvements, field design improvements, and farm infrastructure improvements. During the development process we unlock substantial value in the underlying asset.
We do not wait for general appreciation in the farmland market. We create value immediately, and still benefit if the market values increase.