“gold with a coupon” - The Wall Street Journal
Farmland is an investment in a physical asset that generates income
An investment in farmland is backed with a hard asset because as investor you receive the freehold title to the land. This physical asset is likely to appreciate in value over time.
In addition, putting plants or trees on farmland is like putting buildings on raw land. They add value to the land and produce an annual income.
- In periods of uncertainty investors place greater emphasis on capital preservation.
- Historically farmland has exhibited strong capital protection characteristics over prolonged periods of time.
- Well managed farmland is a fully renewable resource which remains productive in perpetuity.
- An investment in farmland, an asset in finite supply, is unlikely to depreciate in value.
An investment in a scarce and limited resource
The world population will increase by another 2.5 billion by 2050 and all these people will need food and water.
There's only a finite amount of land available on the planet. They are not making any more of it.
The law of supply and demand implies that the value of an investment in a scarce resource like farmland will increase in the long run.
Investing in farmland also means you'll be helping to feed the world population which is already suffering from chronic shortages in food supplies.
Agriculture and Forestry has consistently outperformed the stock market
“The best sector in the world that I know right now is probably agriculture. Everybody should become a farmer. Farming is going to be one of the greatest industries of our time for the next 20 to 30 years. I’m convinced that farmland is going to be one of the best investments of our time.”
- Jim Rogers, 2009, Cofounder of the Quantum Fund with George Soros which gained more than 4,000% in 10 years, while the S&P rose less than 50%
In times of market turmoil and uncertainty, portfolio diversification is key.
By including farmland in a mixed asset portfolio smart investors are able to reduce the possibility of shortfalls in income during periods when other assets may produce little or no income.