Farmland

Acquires agricultural land leased to farmers, generating stable, inflation-resistant lease income and low-volatility diversification.

What is Farmland?

Farmland is among the oldest and most timeless asset classes, deeply connected to humanity’s fundamental and growing need for food. It represents a unique and increasingly popular alternative asset class, characterized by its use for agricultural functions such as crop cultivation and raising livestock. With global populations rising and productive agricultural land gradually becoming scarcer, farmland represents an opportunity to invest in a finite (and generally shrinking) and essential resource. Farmland can provide investors with the potential for stable, long-term capital appreciation driven by increasing land values, enhanced agricultural productivity, and demographic pressures. Historically, farmland has demonstrated resilience, acting as an effective hedge against inflation and economic volatility. Additionally, due to its low correlation with traditional assets such as public equities and bonds, farmland can offer significant diversification benefits, helping investors foster long-term growth and stability within diversified portfolios.

Why consider Farmland for your portfolios?

Farmland offers the potential for long-term capital appreciation. Factors such as urban sprawl, infrastructure development, and population growth can drive up land values over time. Historically, farmland has provided stable returns through land appreciation and rental income and crop yields, often exhibiting lower volatility compared to equities and other asset classes. For instance, during economic downturns, demand for essential commodities like food remains relatively inelastic, supporting farmland’s income-generating potential.​

As a real asset, farmland tends to appreciate during inflationary periods, preserving investors’ purchasing power. The rising prices of agricultural products can lead to increased land values and higher rental incomes, effectively hedging against inflation.​

Integrating farmland into a portfolio can enhance diversification due to its low correlation with traditional assets like public stocks and bonds. The returns generated by farmland are driven largely by agricultural productivity, commodity prices, and long-term trends such as global population growth and dietary changes, rather than short-term market sentiment or economic cycles. This low correlation means farmland can enhance portfolio diversification, reducing overall volatility and potentially stabilizing returns in turbulent market environments.

Farmland appreciation vs. inflation

Data as of December 31, 2023. Source: Statistics Canada, Farmland Credit Canada.
Zoom Chart

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