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A Farmland Investment Primer
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A Farmland Investment Primer

Julie Koeninger
GMO, 2014
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Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

The United Nations expects global demand for food to grow 60% by 2050. At the same time, investors are increasingly seeking out alternatives to the stock and bond markets. Given these conditions, as well as a recent history of strong returns and low volatility, it’s no wonder that investing in farmland has become increasingly popular with institutional investors. But those considering adding agriculture to their portfolios need to make careful choices before plowing ahead, advises investment strategist Julie Koeninger. Her information-packed article examines farmland investing, including its risks and rewards. getAbstract suggests her analysis to institutional investors and financial advisers who’d like to dig further into this asset class.

Summary

Farmland investments offer portfolio diversification, an inflation hedge, a low correlation to financial assets and the potential for strong returns. These investments focus on annual “row crops,” such as corn and wheat; perennial “permanent crops,” such as fruit and nuts; and livestock, such as dairy and beef cattle. In the United States and other developed regions, farmers who already own property may lease additional land from investors to boost their income. In less-advanced parts of the world that lack an active rental market for farmland, the “direct operation” of land by investors and their...

About the Author

Julie Koeninger is the product strategist for timber and agriculture at investment firm GMO.

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