Farmland Doesn't Care About Politics
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There appears to be truly overwhelming support for farmers and U.S. agriculture on all sides of the aisle.
Further, while farmland investment performance does not appear to be impacted by politics, further unease or volatility in public markets could drive an additional “flight to quality” that could positively impact farmland values.
We have received some questions recently from our investor community around politics and its influence on farmland.
Essentially, investors want to know if there are potential ag policy changes that will impact farmers, and, subsequently, farmland investors associated with our upcoming election.
Ag Policy and American’s Views on Farmers
Farmers often utilize federally subsidized insurance programs that provide some level of revenue guarantee.
These programs help limit downside to the farm operator under stressed revenue scenarios created by the likes of unfavorable weather or crop prices.
By assisting the farmer, these programs also have the indirect benefit of aiding the farm owner during times of economic instability.
There are two important notes on this front:
- The farmland investor is most often removed from this program, as the insurance programs are designed for and used by the farmer and her business as opposed to the landowner.
- These programs have exceptional bipartisan support.
For a sense of just how wide the favorability ratings of farmers are, the poll below from farmpolicyfacts.org shows bipartisan support that is pretty astounding considering how far apart political parties are on many other issues.
These favorability ratings are further supported by a recent Gallup Poll that shows Farming and agriculture as the best viewed of 25 different business and industry sectors.
Farmland Investment Performance Under Different Political Parties
There does not appear to be a correlation between which political party is in control and farmland investment performance.
The consistency of farmland investment performance across the years and decades is one of the primary reasons many investors view farmland as an attractive asset class.
Below is a chart showing NCREIF farmland investment performance since 1990.
As can be seen, there does not appear to be a relationship between politics and farmland investment performance.
Additional information about farmland investing and source data can be found on our Why Farmland page, but the takeaway is apparent:
With exceptionally wide bipartisan support and no apparent relationship between farmland investment performance and politics, buying land continues to look like a differentiated long-term investment that doesn’t care about politics or other events causing short-term market fluctuations.
The above content is not intended to be a comparison between products, but is intended for general, educational and informational purposes only. Any performance noted is historical and there is no guarantee any trends will continue. All investing involves risks, including the complete loss of principal. Diversification does not guarantee a profit or protect against loss in a declining market. It is important for each investor to review their investment objectives, risk tolerance, tax liability and liquidity needs before investing. Investment vehicles have differences in fee structure, risk factors and objectives. Investments are considered speculative, involve a high degree of risk and therefore are not suitable for all investors.
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