Historical Farmland Returns
Past performance is no guarantee of future results. Please see additional disclaimers here.
Land is one of the oldest investment classes in existence, producing enormous wealth over generations. We think United States farmland represents an attractive, long-term investment while providing significant relative capital preservation during times of economic turmoil.
As the chart below shows,
invested in farmland in 1990 would be worth over $0 today(1).
"Cumulative Returns of Major Asset Classes, Indexed to 1990"(1)
- U.S. Govt. Bonds
- AAA Bonds
- S&P 500
- Commercial Real Estate
With a growing global population and shrinking U.S. farmland acreage, the laws of supply and demand are clearly in favor of farmland investing. As a result, farmland has consistently beat other asset classes over time.
Perhaps more impressive is the consistency of farmland returns over time. While the value of gold or stock markets can go down over 40% or 50% in a single year, farmland returns have been positive every year since 1990 (the first year of the index).
"Returns vs. Volatility (Std. Deviation)"(1)
(1) Data according to NCREIF, Bloomberg, Bankrate, NYU Stern School of Business, Federal Reserve Bank of St. Louis, and AcreTrader calculations. All calculations assume reinvestment of dividends.
While farmland investment returns can certainly be negative, we think the historical data shows the exceptional resilience of this asset class. Why has this not been all over financial news every year? Because directly investing in farmland was historically difficult and unattainable for most investors. Until now…
More Reasons to Invest in Farmland
- Farmland is mostly non-correlated to other investment assets
- Opportunity to get away from the mainstream financial system
- Large federal deficit and money printing create potential for significant inflation
- Real asset that produces a commodity (food). Over time, inflation = higher crop income
- “Like gold with yield”
- Low historical volatility suggests relatively limited downside in bad years
- Farmland has helped investors maintain wealth through periods of economic turmoil