Farmland: Impact Beyond Returns
Farmland has demonstrated strong absolute returns over the past several decades. It averaged ~11% total annual returns (income + price appreciation) from 1992 to 2021.
Value of $1000 Investment 1992 - 2021
Data representative through December 2021.
Sources: Farmland Values: NCREIF Farmland Index, Timberland Values: NCREIF Timberland Index, Real Estate Values: NCREIF Property Index, Stocks Values: S&P 500 Index, Bonds Values: Bloomberg Barclays US Aggregate Bond Index
Farmland has historically been one of the best inflation hedges. The NCREIF Farmland Index’s Total Return has consistently provided returns more than double the inflation rate since before 1992.
NCREIF Farmland Returns vs. Inflation (% in 1992 - 2021)
Data representative through December 2021.
Sources: NCREIF Farmland Index and the Consumer Price Index - Urban.
The inception date of the NCREIF Farmland Index is Q4 1990. The CPI-U produces monthly data on changes in the prices paid by urban consumers for a representative basket of goods and services since 1913. NCREIF Farmland Index returns are used for the time frame above to demonstrate income and capital appreciation components, which are not available from the TIAA-CREF Center for Farmland Research database.
As the world’s population grows at an unprecedented rate while farmland acreage continues to shrink, long-term food and water security is a critical concern. To feed our rapidly growing population, farms will need to significantly increase their productivity and efficiency.
Population Growth & Declining Arable Land Per Person
Sources: Food and Agriculture Organization of the United Nations (FAOSTAT)
The increasing scarcity of farmland and its lack of correlation with other asset classes make it an exceptionally strong diversification tool for virtually any portfolio. This has driven institutions to significantly increase their investments in farmland over the last 30 years.
Institutional Farmland Investing Growth
Now It’s Your Turn
Investors and farmers are building the infrastructure to mitigate and even reverse the felt impacts of our changing climate. Investments into sustainable agriculture can help balance cropland expansion to satisfy food demand and the conservation of biodiversity and ecosystems. Be a part of driving long-term positive change while earning compelling returns.
Diversify with Low Volatility Assets
White Paper: Introduction to Farmland Investing
Farmland is one of the least understood alternative investment opportunities due to historical constraints in the market. In this paper, we seek to provide a general understanding of farmland as an asset class and highlight the various financial characteristics that make it a compelling addition to investors’ portfolios.
