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, 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 1991 would be worth over $0 today(1).
Cumulative Returns of Major Asset Classes, Indexed to 1991(1)
Past performance does not guarantee future results and there is no guarantee this trend will continue. Note: AcreTrader internal analysis covers periods 12/31/1990 - 12/31/2021. All returns are estimates and assume reinvestment of dividends. Index information is provided for illustrative purposes only and is not meant to represent the results of an actual investment. Returns do not include any management fees, transaction costs or expenses. Volatility is measured as the standard deviation using the monthly total returns of each index or asset class. The historical performance of each index cited is provided to illustrate historical market trends. Risk/reward profile for each asset class varies significantly. This should not be construed as a recommendation of any specific security. You cannot invest directly in an index.
Each investment vehicle has differences in fee structure, liquidity, risk and tax factors, and objectives. Private equities are considered illiquid with a longer time horizon. Bonds are subject to interest rate, credit and call risks. CDs are short-term investments, FDIC insured and are subject to interest rate risk. Commercial Real Estate is subject to credit, liquidity, interest rate, and inflation risks. The S&P 500 is liquid, but subject to valuation and inflation risks. Gold can experience high volatility. REITS are subject to liquidity and legal risks.
Data from: Bloomberg, Federal Reserve Bank of St. Louis, NCREIF and NYU Stern School of Business. "Farmland" = NCREIF Farmland Index. "Timberland" = NCREIF Timber Index. "Commercial Real Estate" = NCREIF Property Index. "S&P" = Standard & Poor 500 Index. "REITs" = Dow Jones REIT Index. "CD" = Bankrate Historical 1-Year CD Interest Rates. "AAA" = ICE BofA AAA US Corporate Index. "U.S. Govt. Bonds" = U.S. Treasury 10-Year Bond." "Gold" = S&P GSCI Gold.
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).
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 mostly non-correlated to other investment assets
- Opportunity to get away from the mainstream financial system
Inflation Hedge
- Large federal deficit and money printing create potential for significant inflation
- Real asset that produces a commodity (food). Over time, inflation = higher crop income
Conservative Investing
- Low historical volatility suggests relatively limited downside in bad years
- Farmland has helped investors maintain wealth through periods of economic turmoil