Historical Farmland Returns
Past performance is no guarantee of future results. Please see additional disclosures.
Land is one of the oldest investment classes in existence, which in many cases has produced significant 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.
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 historically produced favorable returns with lower volatility relative to other alternative asset classes, as reflected on the chart below.
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).
Farmland Returns & Volatility vs. Other Major Asset Classes(1)
Cumulative Returns (12/31/1990=100)
Volatility
(1) Supplemental information. Please see additional disclosures for further information. Source: NCREIF, Bloomberg, Bankrate, NYU Stern School of Business, Federal Reserve Bank of St. Louis and AcreTrader calculations. All returns are estimates and assume reinvestment of dividends. Updated data published on 12/20/2021 and is for the period 12/31/1990 - 12/31/2020. Prior to this update, the data reflected the period 12/31/1990 - 12/31/2018.
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
Portfolio Diversification
- Farmland is predominantly non-correlated to other types of investment assets
Potential Inflation Hedge
- Farmland has historically shown a strong correlation to inflation due to the fact that many of the commodities produced by America's farmland are a core component of the Consumer Price Index (CPI).
Historical Wealth Preservation and Appreciation
- Low volatility in land values over the last 50 years, when coupled with farm income, has helped provide downside protection to landowners and therefore historically farmland has helped investors preserve capital through periods of economic turmoil.