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- September 1, 2016; Vol. 3, Number 9

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Headwinds in Commodities: Declining farmland values present new opportunities for investment managers

by Eric Rama

In the past decade a growing amount of capital has targeted farmland investments. This period of growth for the asset class has been accompanied by land values appreciating faster than the long-run trend. Despite increased popularity, farmland investments remain a small asset class in terms of invested capital. Net farm income reached record highs in 2013 and then fell by 38 percent in 2015, causing land values to decrease 3 percent. Land values are expected to continue their decline in 2016.

This presents an opportunity for investment managers to take a more hands-on management approach in order to outperform those with a passive strategy.

National farmland values have grown at an annual rate of 7 percent over the past 15 years compared
to the long-term average of 4 percent. Meanwhile, institutional and high-net-worth investors have begun investing in farmland, attracted by the long-term nature of the investment, inflation protection, and limited correlation to the

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