Investing in agriculture can have huge benefits
As of May 16th, the S&P 500 is down 16%, its worst start to a year since 1970 (according to Dow Jones market data). Gold, typically considered a haven, has swung into the red. Bonds are falling alongside stocks. Cryptocurrencies, pitched for years as a counterweight to traditional stocks, are sinking at an even faster rate. Bitcoin has lost more than a third of its value in 2022.
Today’s “Sell Everything” market has investors questioning whether the U.S. is heading into a recession, and it also has investors on the prowl for alternative ways to make money. It’s more important than ever to diversify outside of stocks and bonds, and today many experts recommend allocating 15-20% of a portfolio into “alternative investments” such as real property like farmland.
Buying farmland as an investment is growing in popularity. It’s considered a good investment that can add wealth outside of the stock market. But is now the right time to add farmland to your portfolio?
Here are 10 reasons why it might be a good time to buy farmland as an investment:
- Owning farmland provides two income streams: consistent passive income from the sale of crops, plus significant long-term capital appreciation from owning the land on the farm.
- Agricultural land ownership has historically outperformed most other asset classes, including gold, bonds and commercial real estate, by providing an average annual rate-of-return of 11% over the last 20 years.
- Owning farmland follows the trusted and true strategy of holding long-term to generate healthy returns. In today’s volatile market, it’s important to balance long-term and short-term assets, and buying agricultural land is a proven long-term approach to building future wealth.
- Agricultural assets bring valuable diversification to any portfolio, offering significantly less risk than other alternative investment types, such as cryptocurrencies or NFTs.
- Owning farmland provides consistent returns when inflation rises. Traditional assets like stocks, mutual funds, ETFs (exchange traded funds), and even farm Real Estate Investment Trusts/REITs (which are tied to the stock market), all suffer during bear markets.
- Agriculture assets are resistant to depreciation. The value of the asset is fertile land, and the crops the farm produces, as opposed to buildings, which decay and depreciate over time.
- Farmland investments benefit from the laws of supply & demand: The old saying “they aren’t making any more of it” applies to farmland. As investors look to buy agriculture assets, those who get in earlier are poised to benefit from the appreciation of the land value.
- Buying agricultural land is different from many other asset classes because farmland produces food, which is a crucial human resource. People need food today, tomorrow, and every day that follows. For this reason, farmland appreciates in value, even in less-than-desirable economic situations.
- Farmland is a low volatility asset class, yet it offers upside, even during periods of stagnate or negative economic growth. For example, during a recession, people travel less. They usually reduce spending on luxury goods – but people still need to eat, and that demand will never change.
- Some of the world’s wealthiest and smartest investors – such as Warren Buffett and Bill Gates – are large farmland owners and investors.
How To Buy Farmland In 2022
Now that you know why it’s a good idea to invest in farmland, the next question is: What’s the best way to go about owning farmland? The good news is – you don’t need to purchase an entire farm. You don’t need to buy farm equipment. You don’t need to check weather reports. You don’t need to purchase fertilizer. You don’t need to know any farmers, and you don’t even need to know anything about farming to earn stable returns from farmland investments.
Farmfolio offers an innovative approach to farmland investing by providing a turnkey model that addresses the entire seed-to-shelf process by combining:
- Farmfolio’s expertise in finding and acquiring the right farmland in fertile and productive land areas. This land is subdivided into parcels called LOTs (Land Ownership Titles) which are sold to individual investors.
- An independent Farm Owners Association (FOA), one with extensive experience in hiring and supporting a third-party farm management team who will manage each LOT and take care of every detail, from land development, to planting and harvesting. Each landowner becomes a member of their farm’s FOA.
- Sale and distribution agreements with local packhouses, who buy crops at price points that deliver consistent passive income to farmland LOT owners. These packhouses have established and productive sale agreements with some of the world’s largest retailers.
A Turnkey Process from Seed-to-Shelf
Farmfolio’s turnkey process addresses every detail – from seed-to-shelf – offering two income streams for investors: ongoing income from the sale of crops (also called harvest returns), plus significant long-term capital appreciation from owning land on a productive farm.
Investors who purchase and invest in LOTs from Farmfolio get the land’s legal title in their name. Land titles can be put in Individual Retirement Accounts (IRAs). At any time landowners can sell their title or transfer ownership to an heir or beneficiary.
The Right Time for Innovative – yet Proven – Alternative Investments…
According to the American Association of Investors, 59% of individual investors expect stocks to fall over the next six months, representing the most bearish sentiment since the financial crisis of 2008. The same report states that a majority of investors wrestle with two competing desires: a safe place to park their money, and a hunger for “market returns.”
Buying farmland as an investment offers an innovative – yet proven – alternative to mix into any investment portfolio, offering short-term investment streams from the sale of farm products and long-term capital appreciation. If you are interested in learning more about Farmfolio’s turnkey investment model, and to start earning harvest returns, please fill out the form below.