The US’s farming industry has taken massive hits over the past few years. That doesn’t mean that investing in agricultural land is a bad idea or will be a bad idea in the future. Farmland will always be essential – especially since the global population is on the rise. Unlike regular real estate investments, you need a good knowledge of agricultural land to make suitable investments.
There are different ways you can go about investing in agricultural land, and you don’t have to buy a farm and try to run it on your own or hire others to run it. You could invest in ETFs or mutual funds, focusing on farmland or purchase fractional interests.
If you’re still unsure if this is the right kind of investment for you, here are a few reasons to consider putting some money into agricultural land:
In the long run, farmland has outpaced even gold regarding inflation hedging. Over the past three decades or so, cumulative returns on farm/agricultural investments have increasingly outperformed gold. Gold has always been one of the most valuable commodities in history (and still is). Coffee beans/plants, in particular, outperform gold, while wheat and corn are always close behind.
It increases the favorability of your portfolio. Not only does investing in agricultural land help to diversify a portfolio, but it also provides stability. Even in times of instability, agriculture is an industry that will recover and rise again. Typically, land prices do increase, and the yields from agricultural products will eventually improve as well.
More Reasons for Investing in Agricultural Land
As mentioned above, it’s crucial that you do your research first so that you’ll have some knowledge of the farming industry. Fortunately, you don’t have to learn everything, and you can still leave much of the research and hard work to others. You need to make sure you put your money into the right ETF or other type of investment.
High yields (for investors) and capital appreciation are both benefits of investing in agricultural land. The high yields don’t just come from the crops themselves. There may be other unexpected sources of income as well, such as timber sales, hunting leases, equipment leasing, renewable energy, and so forth. Of course, the capital appreciation of the property/land itself is an exciting part of investing in farmland.
These benefits are just the minimum. There are plenty of other reasons for investing in agricultural land as well – especially if you go through a platform such as FarmTogether. You can count on your investment going to quality land managed by farmers, topography experts, and other professionals.