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 correlati