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Now might be the ideal time to invest in U.S. farmland — here's why

Now might be the ideal time to invest in U.S. farmland — here's why
Now might be the ideal time to invest in U.S. farmland — here's why

This is a strange and disorienting time, even for seasoned investors. The pandemic flipped whole industries upside down, Elon Musk is buoying Bitcoin and its canine counterpart Dogecoin, and a pack of provocateurs sent GameStop to the moon.

In this climate, many investors are just doing their best to abide by what history has taught them: Volatility comes and goes, but a well-balanced portfolio always does well over the long term. It’s been true for more than 100 years, through the World Wars, recessions and natural disasters of all kinds.

While that still makes sense, it’s probably wise to add a little extra diversity these days — preferably in something insulated from other asset classes. And as it turns out, now is a very good time to invest in one of human civilization’s oldest and most reliable sources of wealth.

That’s right: we're talking about investing in farmland.

Shelter in a time of uncertainty

A group of farmers are discussing in the field, using a tablet. Two men and one woman. Team work in agribusiness
StockMediaSeller / Shutterstock

Unlike many other types of investments, farmland is intrinsically valuable — come what may, people still need to eat. And with the global population poised to hit 10 billion by 2050, there will be no shortage of mouths to feed.

The rate of return on farmland over the last 47 years is 10.27% — better than average returns on real estate or stocks, according to FarmTogether, an investment platform that allows qualified investors to purchase a stake in U.S. farmland without buying a whole farm.

Over the last 20 years the numbers have been even stronger, with farmland investments yielding a return of 11.98% compared to 8.68% for real estate and 8.78% for the Russell 3000 Index, a capitalization-weighted index that aims to be a benchmark for the U.S stock market.

Farmland can also be a strong hedge against inflation: When consumer prices rise, the prices of commodities like food generally rise, too. That means the value of a portfolio with farmland is more likely to keep pace.

If all of that makes you want to learn more about farmland investing, you shouldn’t delay: The United States has less and less of this valuable resource by the day — the American Farmland Trust says 11 million acres has been lost to development over the past 20 years — and much of the remaining supply is about to go on sale.

Farmland is changing hands

Senior man farmer shaking hands with young pretty woman with notebook in corn field. Insurance in agribusiness concept
Budimir Jevtic / Shutterstock

The U.S. population is aging, and working the land has always been a demanding job.

While family farms make up 96% of all farms in the country, federal data suggests the next generation isn’t interested in taking up the task themselves. Farmers over age 65 own 40% of the land and outnumber farmers below 35 by a factor of six to one.

The result: A profitable asset is hitting the market that has, until now, been difficult to buy into. Farmland has traditionally been privately held, but as more farmers retire and sell or rent out their land, investors have a rare window.

Over the next 20 years, approximately 370 million acres of U.S. farmland will change hands, according to the American Farmland Trust.

Futuristic approach to traditional investment

Tractor spraying pesticides on soybean field  with sprayer at spring
Fotokostic / Shutterstock

You don’t need to grab a pitchfork or wear a straw hat to invest in farmland (ask Bill Gates — he currently owns more farmland than anyone else in America).

You don’t even need to buy an entire farm.

With nothing but an easy-to-use smartphone app, you can purchase shares of American farms.

In doing so, you're supporting rural communities and the world’s food supply — all while setting yourself up for potentially market-beating returns.

In an uncertain investing climate like ours, it’s rare to find an asset that beats other investing options in both returns and stability.

Now, with a potentially once-in-a-generation opportunity opening up, you can do just that.