Mark Twain is purported to have said, “Buy land, they’re not making it anymore.” Despite this sage advice, agricultural investments account for only a small proportion of investor portfolios. Those who invested in the sector have been rewarded handsomely. The National Council of Real Estate Investment Fiduciaries (NCREIF) reports farmland investments returned 11.7 percent on an annualized basis since records began in January 1991. Comparable annualized S&P 500 returns for the same period were 9.8 percent. The farmland lending environment has also been favorable, with better risk-adjusted returns than most fixed-income sectors in recent decades.
These strong returns, as well as improved transparency and expanded product offerings, have increased interest in the sector. However, while there are compelling reasons to be optimistic regarding the long-term prospects for continued value creation in farmland, these investments are not immune to investment cycles. The secto