Agriculture: An awesome asset class
Impressive Performance
Farmland and agricultural projects have consistently delivered robust absolute returns over the last few decades. It has maintained an average total annual return of approximately 11%, encompassing both income and price appreciation, spanning from 1992 to 2023.
Why Invest in Agricultural Projects?
Agricultural stands out for its resilience across various market conditions, offering stable and reliable returns over the past several decades. It boasts low correlation to traditional and alternative assets, making it a valuable addition to investment portfolios. Unlike other assets, the value of farmland isn’t solely influenced by market sentiment or economic factors; instead, it is driven by agricultural-specific dynamics such as commodity prices and weather patterns, as well as parcel-specific attributes like soil quality and water accessibility. Notably, farmland investment aligns with long-term trends such as population growth, which is projected to reach nearly 10 billion by 2050 according to the UN. Despite increasing demand, farmland acreage has been steadily declining, particularly in the United States where total farm acreage has decreased by nearly 20% since the mid-1960s according to USDA data. In just the span of 2012 to 2017, the US lost 14 million acres of farmland, roughly equivalent to the size of West Virginia.
