farmland-is-an-inflation-hedge-how-to-invest.

Farmland Is an Inflation Hedge. How to Invest.

Updated July 29, 2022 8:21 am ET / Original July 29, 2022 1:30 am ET

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Paul Pittman, chairman and CEO of Farmland Partners. Photograph by Evan Jenkins

At a time when stock prices are slumping and inflation is soaring, farmland looks to be an appealing investment. It is a real asset that performs well in inflationary environments, delivers stable returns over long holding periods, and exhibits low correlation to financial assets. What’s more, farmland prices stand to benefit from growing concerns about food and land scarcity.

U.S. farmland has posted an average annual return of 11.2% for the 25-year period that ended in March 2021, according to the advisory group at Green Street, a commercial real estate analytics firm. That compares with a 9.6% gain for the S&P 500 index in the same period. The S&P 500’s return is also much more variable. Historically, its volatility has been more than twice that of farmland.

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