is agricultural land a good investment



Farmland can serve as a cornerstone of a balanced investment portfolio. Commodity prices, including the cost of food, tend to rise with inflation. This strong correlation allows agricultural investing to protect against inflation, especially compared to high-volatility assets.Mar 25, 2022

Why to invest in farmland?

Usually, agricultural land is considered a good investment for high net-worth individuals and for those with surplus income. For salaried or self-employed individuals, living in cities, going through all this process will be time-consuming and tiresome. Mistakes to …

How to invest in farming without owning a farm?

Investments on agricultural land are basically speculative hence could be quite risky and as a small time investor that would not be a chance that anyone should take as there are many more lucrative forms of investment which could bring better returns.

Is buying land a good investment?

After all, people will always need to eat. Farmland investing is one of the most stable real estate options around and has consistently gained value since the 1990s. The combination of the increased value of crops grown and scarcity of farmland provides a potent combination for farmland investing.

Is farmland a good investment?

 · Farmland has historically been a good investment. Unfortunately, not many investors have been able to benefit from this asset class, …


Is owning farmland a good investment?

The reasoning is simple: farmland is a good investment because it’s a limited resource (there’s only so much land in the US and the number of undeveloped acres keeps shrinking) and it’s in high-demand, given food production is so essential.

Can you make money investing in farmland?

Add in the cash rent yields, and the return to investors has been even more impressive. Since 1991, farmland has produced a positive return every year, generating an average annual return of 11.5%, according to the USDA.

How do you make money on agricultural land?

6 Ways to Make Money Off of FarmlandRaising Animals To Produce Products. Animals are a natural part of owning and working farmland. … Build A Barndominium For Others to Rent. … Rent Plots of Land to Local Growers. … Rent Out The Property for Fishing or Hunting. … Create Storage Space for Others To Use.

Is farmland a good asset?

Farmland has a positive correlation with inflation and is considered a classic inflation hedge. In fact many investors view it as more favorable than other hard assets such as gold because farmland produces positive cash flow while shielding from the deleterious effects of inflation.

Is land a good investment 2020?

Buying raw land is a very risky investment because it will not generate any income and may not generate a capital gain when the property is sold. Moreover, utilizing a farm real-estate loan to purchase land is very risky.

What is the best way to invest in farmland?

The closest that an investor can get to owning a farm without actually doing so is by investing in a farming-focused real estate investment trust (REIT). Some examples include Farmland Partners Inc. (FPI) and Gladstone Land Corporation (LAND). These REITs typically purchase farmland and then lease it to farmers.

How do farmers become rich?

Farmers and investors can reap great rewards from agriculture as it produces food, fruits, fish, and snails, along with poultry and livestock, all of which will generate income since food is of tremendous value to people and will never go out of style.

Which farming is most profitable?

Some Best Profitable Farming In India 2022Garlic Farming. The payoff on growing garlic can be enormous for those who prefer to grow “gourmet” garlic. … Lavender Farming. Lavender farming produces above-average gain for small growers, as it is such a varied crop. … Gourmet Mushrooms Farming. … Bamboo Farming. … Willows Farming.

How much can we earn from 1 acre land?

Rs. 8-10 lakhs can be earned in a year with only 1 acre of land. This method will require less effort and less materials.

How does agricultural land appreciate in value?

(c) Farmland may appreciate in value through the following ways: (i) fertilization, manuring and liming (ii) reclamation and drainage (iii) fallowing (iv) proper cultivation methods e.g. crop rotation (v) control of erosion (vi) irrigation (vii) rotational grazing.

Does farmland appreciate?

Over the last 20 years, the price of farmland per acre in the United States has risen by an average of 4.4% per year to $4,442 per acre as of 2019. This represents an increase of $2,394 per acre of farmland over this time period. The values shown here only represent farmland appreciation.

Is farmland a good investment against inflation?

Farmland seems to be the ultimate investment opportunity due to its positive correlation with inflation. It beats out bonds, stocks, and even the timeless classic, gold. There seems to be no other investment that offers a hedge against inflation like farmland.

Do farm owners make money?

About 89 percent of U.S. farms are small, with gross cash farm income less than $350,000; the households operating these farms typically rely on off-farm sources for most of their household income. In contrast, the median household operating large-scale farms earned $402,780 in 2020, and most of that came from farming.

What is the return on farmland?

U.S. Farmland Returns Over the last 20 years, United States farmland has offered average returns of 12.24%. At this rate, $10,000 invested in farmland in 2000 would now be worth over $96,149. Farmland returns are made up of two values, land appreciation, and capitalization rates of the property.

How can I make extra money on a small farm?

Ways to Make Money in the GardenSell Extra Garden Seeds.Grow & Sell Extra Seedlings.Start a Market Garden & Sell Vegetables.Start a Medicinal or Culinary Herb Garden & Sell Plants.Grow an Extra Row of Garlic & Sell Seed.Grow Microgreens for Restaurants & Market.Start a Worm Farm.Sell Perennial Herbs & Flowers.More items…•

How can land be used to generate income?

You can make money buying land in a few ways:Sell the land. You can hold on to the land and sell it in the future. … Boat storage. A simple way to make money off of your land is to allow others to use it for storage. … Foresting the timber. … RV storage. … Campground. … Solar energy. … Horse stables.

Is sale of rural agricultural land taxable?

Agricultural land in rural areas is not considered a capital asset. This is the reason any gains from its sale are not taxable under the head Capit…

How much construction is allowed on agricultural land?

Agricultural land cannot be used for constructing property. You need to get the land use converted from agricultural to residential before any cons…

How to convert agricultural land to non-agricultural land?

Land is a state subject and according to law, fertile land cannot be converted to be used for residential purposes. Only dry or barren land parcels…


Salient factors to remember as you buy agricultural land

It should be understood that there are good and also dicey investments hence selecting between the two would need careful consideration. Investing on agricultural land as a small time investor could be one area which could bring you negative results.

Real estate speculation

There was a boom in bare land with prices rising quite sharply especially in the State of California in the 1970’s but that has been short lived with prices in all the contiguous states of the United States not behaving with any excitement in the recent past.

Agricultural land plays a major role behind real estate industry

An interesting survey conducted by William Larson, who was attached to the Bureau of Economic Analysis and presently a senior economist at the Federal Housing Finance Agency has estimated that the total value of all land in the contiguous United States is only $ 42 trillion.

Real estate advice as you buy agricultural land

In fact, if you were to approach any real estate agent and inquire about investing in land their eyebrows would lift up and in all probability they sit you down and offer you other more attractive real estate investments of which there are many.

How to get the most out of agricultural land you buy?

Environmental pollution has become one of the major concerns in today’s world. This has created an ideal platform for the popularity of sustainable agriculture. In other words, the farmers are concerned about following a more sustainable approach in order to get the maximum yield while minimizing environmental pollution.

United States Farm Bill passed in the year 2018

The future of hemp industry in United States looks promising as the President Donald Trump signed 2018 Farm Bill. This officially legalized hemp within the country. This can create a tremendous impact on both CBD and hemp industries that exist within the country.

The legalization of hemp around the country

In 2014, President Obama signed a bill, which gave authorization to the cultivation of hemp in some of the states. As a result, around 40 states across the country went ahead and created hemp pilot programs, falling under this policy.

Why Invest In Farmland?

Around five months ago, we had published an article on how farmland can offer inflation protection.

Performance Of Farmland Investing

The Federal Reserve Bank of Kansas recently published their third-quarter report titled “Farmland Values Surge Alongside Strength in Agriculture,” validating our investment thesis.

Is Farmland A Good Investment Still?

It is hard to predict the future, but I struggle to see a scenario when the demand for food decreases.

Final Thoughts On Is Farmland A Good Investment

I am bullish on farmland investing based on the combination of increasing food demand, pricing power, lower labor costs, and government support.

How much does it cost to buy land?

It’s also cheap: On average, land will cost you a mere $3,020 per acre. Unlike avocados or iPhones, land is a finite resource, which you’d think would shore up its value. So let’s talk turkey: Is land truly a good investment?

How to keep land from draining your finances?

This can be done by planting crops or trees on it, leasing it out for cattle, or offering up hunting rights.

Is land an investment?

But while land may seem as solid as an investment gets, it’s not something you want to venture into without careful consideration of the costs and red tape you’ll encounter. Here are some of the questions to ponder to help you decide whether you want to forge ahead.

Why is farming good for investing?

Farmland investing has a long history of producing stable returns. The returns are due to increasing farmland values and the profit from the cash crops.

How many ways can you invest in farmland?

You can invest in farmland in four ways.

What is farmland income?

Crops grown on farmland are sold for profit. The income produced by farmland investing can be considered similar to rent. Gross farm income reflects the total value of agricultural output plus Government farm program payments. The U.S. gross cash farm income is at the highest level since 2015.

Why is farming important?

Even if we have a recession or a war, farms continue to produce food. Farmland investing results in increased food production, providing a valuable function to society. And it is also beneficial to your portfolio with reduced volatility.

What are the challenges of buying farmland?

The challenge is with trying to find land suitable for agriculture that is available for sale. The soil quality, weather, and water sources are important factors to consider when purchasing land. After you buy the land, you need to make sure that necessary irrigation and drainage systems are installed. And finally, leasing it to the farmer who is experienced enough to turn your farmland investment into a profitable venture.

What is farm platform?

The farm is presented on the platform for individuals to evaluate based on land values, income potential, and other assets. You purchase shares in the entity which owns the farm. The platform takes care of farm management aspects such as insurance, accounting, leasing the farm, and working with the farmer.

Is cropland an asset class?

Although this asset class is now available to individual investors, it is not a new asset class. Large institutional investors have favored farmland for a long time. The top U.S. university endowment funds have invested billions in cropland.

How long does it take to invest in AcreTrader?

The average investment period is between five and ten years per offering. Some projects require a 20-year holding period. One downside is that you must be a high net worth accredited investor to use AcreTrader. You must have an annual income above $200,000 ($300,000 for couples) or a $1 million liquid net worth.

What do you think of when you think of owning a farm?

When you think of owning a farm, you may think of backbreaking work to harvest crops and early morning calls to milk the cows. But perhaps you should think of farmland differently.

What is real estate investment trust?

Real Estate Investment Trusts are companies that collect money from portfolios of real estate. And there are REITs related to farming that you can invest in.

How much revenue do you need to produce to be a farm?

(To be officially labeled as a “farm,” you must produce at least $1,000 in sales of agricultural products in a year.)

How much land is a share of an acre?

Individuals select a piece of farmland and purchase shares in the entity that owns it. Shares are equivalent to about 1/10 of an acre.

What is the average net income per farm in 2021?

The average cash net income per farm in 2021 projects that net farm income will decrease by 8.1% in 2021 from 2020 farm incomes. The median household income of farmers in 2019 reached $83,111, which is roughly the same as four years ago. The USDA notes that most income from farmers is actually from off-farm activities.

What are some innovations in farming?

Some of the greatest innovations in farming come from companies developing seeds designed to withstand drought and other harsh conditions and to produce high crop yields.

Why is small farm land important?

These land types still require exposure to basic agricultural knowledge in order to make profitable investment decisions, though these are often considered easier to break into when compared to row crops. Part of the reason for that is because it is much easier for investors to obtain smaller plots, depending on what they can obtain financing for.

What is commercial land investment?

Commercial and residential land investments are lots zoned for a specific use, that are yet to be developed. These are one of the most common types of land investments for a few reasons. The most obvious is: these land plots are already destined for a certain type of development. This not only gives investors a starting point when analyzing the deal, but it can also help with the financing process. Lenders want to know what the return will be on a piece of raw land, and with commercial and residential areas the purpose of the investment is already more clear.

How to find raw land?

Finally, investors may be able to find raw land using a direct mail campaign. Wholesalers most commonly use this strategy, but it can be quite effective for other investing strategies as well. Research landowners in your area by searching tax and other public records, and pull their contact information for your mail campaign. Remember to execute multiple strategies when searching for a raw land investment and be consistent until you find the right opportunity.

How to make money from raw land?

The first way investors can make money off their raw land investment is by subdividing it for land sales. Investors have the potential to increase the total land value of their investment by separating it into smaller lots and selling them individually to buyers. In many cases, the subdivided land can be more valuable than the whole. This is due to marketability, and the fact it might be easier to find a buyer for a smaller, more affordable parcel of land, as opposed to one large lot.

How to get return on investment from raw land?

Thanks to inflation, one of the primary sources for a return on investment with raw land is through appreciation. Because the price of land today has the potential to become more valuable in coming years, buying and holding onto undeveloped land has the potential to earn viable returns for investors, especially in the long-term.

What to do before buying raw land?

Are there any other issues with the area? Before making an offer on a raw land investment, it is a great idea to hire a land surveyor to check out the property. A land survey will confirm the boundaries of the plot and identify any potential restrictions. For example, the land may be in a designated flood zone. Depending on your plans for the land this could greatly affect the potential profitability of the deal. Take precautions when purchasing raw land by doing your homework and hiring a professional land surveyor.

What is ground lease?

A land lease or ground lease allows individuals and/or companies to rent land rather than purchase it. In addition, you can lease a raw land investment for other purposes.

What is the most important aspect of farming?

One of the most important aspects of farming is pest control. FMC Corporation supplies those much needed pest control products and provides other solutions to farmers.

How to gain exposure to farmland?

One of these methods is by investing in stocks related to the farming or agriculture business. In this article, we will be covering some of the top stocks for exposure to farmland and agriculture.

What does Deere and Company sell?

They also sell equipment for homeowners such as lawn mowers and snow blowers.

Is Tyson Foods a direct investment?

On the farmland owned by many savvy investors, food is grown or animals are raised for the slaughterhouse. Investing in Tyson Foods isn’t a direct investment into farmland , but it gives you exposure to our very important food industry.

Does AGCO sell parts?

If it’s a piece of equipment on a farm, AGCO probably sells it or sells parts for it.

Does John Deere sell lawn mowers?

Another name we are probably all familiar with is John Deere. No, they don’t just sell lawn mowers.

Does Grow Light sell indoor grow lights?

Beyond just the lawn care and plant food, they also sell indoor grow light systems and more commercial products for larger growing operations.

What is a farmland REIT?

A farmland REIT is a real estate investment trust (REIT) that’s invested in a diversified portfolio of farmland. These farmland REITs usually hold a variety of different types of farmland across a range of different states, and they rent that land out to farmers.

How to invest directly in farmland without buying a farm

While the best farmland REITs offer an easy and convenient way to invest in farmland, they can sometimes mirror the stock market in a way that reduces their diversification benefits.

Frequently asked questions

Farmland REITs invest in agricultural land as their real estate holdings. This allows investors to add farmland exposure to their portfolio by purchasing shares in these agricultural REITs.

How Can The Land Be used?

Investors must consider not only the value of the land itself—in terms of its location and price—but also its intended purpose, says Eric Malmberg, a broker with Re/Max Advantage Plus in Minneapolis–St. Paul, who specializes in land sales. As such, your first step should be to check with the city or county to see if the land is zone…

See more on

Can Land Be rezoned?

  • What if the land you’re eyeing is not zoned the way you were hoping? Many an investor has plowed ahead anyway, intending to maximize an investmentthrough rezoning, a phenomenon known among investors as “future-use payday.” For instance, maybe land that’s classified as agriculture currently has a restriction that will be lifted and reallocated for condos once the local population…

See more on

Can I Make Money Off The Land immediately?

  • Keep in mind that land comes with carrying costs: You’ll have to pay taxes on it, for instance. As such, to keep your land from being a constant drain on your finances, you’ll want to find a way for it to generate income immediately. This can be done by planting crops or trees on it, leasing it out for cattle, or offering up hunting rights. “The key to holding raw land is to keep the taxes and …

See more on

What Do Developers think?

  • But if your dreams are to build something on your land, one professional you may want to call for advice is a developer. As a rookie investor, you may be valuing attributes that a homeowner would look for, like natural beauty, views, and proximity to amenities. And while these factors are important, a developer will eye additional details such as the number of buildable acres (which …

See more on

Leave a Comment