It’s generally a good idea to make investments only in industries or categories that you feel at least somewhat knowledgeable about. Or, at the very least, to partner with professionals who focus all their time on investing, so you can benefit from their background as you make decisions about where to put your money.

For those who invest in real estate or who are interested in widening the range of their portfolio with real estate properties, an emerging trend is catching their eye: Farmland. If you’re interested in getting into agriculture as part of your real estate holdings, it’s a trend worth checking into now.

Risk Averse Investors Look at Agriculture

For those with a low tolerance for risk, agriculture may be just the type of industry they want to invest in. Food and commodity crops are never going to go out of style, after all. Demand is predictable because farms provide the basic necessities we all need to buy and consume.

As Successful Farming pointed out, “Long story short, money is moving out of higher risk investments into farmland. The returns may not be as sexy, but they are rock-solid. The general sentiment is that as trade tensions ease and agricultural productivity improves, returns can only go up.”

Avoiding Market Volatility With Farmland Investments

In addition to avoiding risk, many investors are curious about putting assets into agriculture out of concerns about volatility in the market. The Financial Times pointed out that “Increased market volatility has forced investors to search for assets that will be resilient throughout the economic cycle. Unexpected market events are seemingly becoming more common, requiring investors to revisit their asset class allocation strategies in order to pursue their long-term return targets at an acceptable level of volatility.”

Because of this, agriculture becomes more mainstream, “potentially providing attractive long-term annualized returns that are uncorrelated to traditional financial products such as fixed income and global equities.” Individuals seeking consistent returns gravitate toward farmland investment for these reasons.

Insight from the U.S. Department of Agriculture

The U.S. government gathers data about agriculture trends on an ongoing basis for analysis, which researchers and investors rely on to guide their decisions. As for the value of farmland, “USDA's annual June Area Survey indicates that farmland values began rising in 1988 and, except for single-year declines in 2009 and 2016, have continued rising.”

Keep in mind that you have to account for regional differences when evaluating potential farmland investment.

The USDA explains that “regional farmland real estate values vary widely because of differences in general economic conditions, local farm economic conditions, government policy, and local geographic conditions that affect returns to farming.”

So Corn Belt real estate hits prices twice the average nationwide, but farmland in the Mountain area reach prices half of the national average. This illustrates the value of working with farmland investment professionals, to help you formulate your investment strategy.

Aligning Yourself With Agriculture Investment Professionals

When it comes to following financial trends in real estate, it’s prudent to align yourself with industry professionals who have plenty of experience with farmland investing and farming.

The team at FarmCek understands what it’s like to begin making investments in a new category. We devote our time and resources to staying on top of developments in farmland and have first-hand experience running successful farm operations. We welcome the opportunity to answer any questions you might have about getting started.

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For access to farmland investment opportunities, create a complimentary FarmCek account here.

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