By Nicholas Larsen
April 11, 2022
Excerpt from article:
One of the main reasons for investing in farmland at present is the diversification benefits it offers within investment portfolios. With returns typically stable and exhibiting low correlation with other asset classes, investors have started increasing their farmland exposures to protect themselves against market uncertainties. “The attraction that people have to investing in farmland is that it tends to be countercyclical to the stock market. It’s a hedging strategy,” Daniel Bigelow, a professor of agricultural economics at Montana State University and former U.S. Department of Agriculture research economist, told NBC News in June. The value of farmland thus tends to remain resilient in the face of a struggling economy.
It also provides an effective hedge against inflation, with annual prices in the US growing at the fastest rate in about 40 years, especially given that farmland produces important agricultural staples with prices also rising precipitously. “Every single institutional phone call I’ve had in the last six months has included a discussion of inflation. Five years ago, it would have been zero,” Stephen Johnston told Bloomberg in December. Johnston is managing partner of Calgary-based Veripath Farmland Partners LP, an open-ended fund that manages more than 90,000 acres in portfolios of row-crop land diversified across Western Canada and operates by leasing the land it owns back to farmers.
Original article here