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Bumper Crop: Making a play in America
Until recently, the average investor who wanted to play the U.S. farmland sector had few options. But two newly public companies investing in U.S. farmland have given investors a liquid way to gain exposure to the sector and, by extension, food demand.
Institutions, including pension funds and insurance companies, have been active in the sector for years, although most of these investors simply rent their land holdings to actual farmers. Less than half a percent of the $2.5 trillion U.S. farmland market is owned by institutions, according to the TIAA-CREF Center for Farmland Research at the University of Illinois. Farmers still own the vast majority of American farmland.
It is not hard to see why deep-pocketed investors have been drawn to the sector. As an asset class, farmland has outperformed major real estate sectors as well as stocks and bonds over the past two decades, according to Green Street Advisors. Farmland also has a low correlation to major asset cla