Fight Inflation By Investing in Farmland
Tony Soprano rarely offers his children lessons in ethics. However, in Season 4 of The Sopranos, Tony gives his son a piece of advice to remember.
“Buy land, A.J., ’cause God ain’t making any more of it,” Tony says.
Essentially, Tony tells his teenage son that land will always be worth the investment because no matter the state of the economy, land is, by definition, limited and irreplaceable.
This is especially sage advice during times of rampant inflation — the tendency of money to lose its purchasing power over time — as land ownership offers excellent financial protection while prices are rising.. Historically, real estate has risen in value faster than inflation, and farmland in particular tends to appreciate in value significantly, even as the general economy suffers.
Let’s take a look at the time period between 1971 and 2008 as an example, and you'll see the value of farmland consistently outpaced inflation. Here are some data points, according to NCREIF, that other news outlets won’t tell you:
I would take those inflation-crushing odds and then brag about them to the loons on social media who despise farmers, the very backbone of this country.
You can go back even further and the point will remain true: every year since the end of WWII, save for 1983,’ 85-’87, farmland in the United States has experienced a steady rise in value, despite domestic farmland becoming exceedingly rare, and even more lucrative opportunities being located abroad.
So why does farmland offset inflation so well?
Well, the answer is that farmland is in the unique position of not caring about position — or, in this case, location — at all.
Non-farmland real estate investments like personal homes and commercial establishments depend almost entirely on location, which changes, inviting unpredictable ebbs and flows due to things like local job conditions and booms and busts of the latest shopping trends. (Circuit City anyone?) But farmland is different, as it does not depend on fluctuating forces like tourism, development, and economic growth. In other words, farmland is the Teflon Don of real estate.
That’s not all. While farmland retains a level of value other assets do not, it also generates income through the sale of crops. Row crop farmland has produced cash income consistently between 4 and 8 percent. So farmers can earn now and cash out later.
And while crops like citrus and nuts take several years to begin production, they offer high yields and land appreciation opportunities when they do become productive, making them solid financial investments as well.
It’s rare I suggest taking advice from a vicious and clinically depressed mobster, but in this case, I think Tony is right. God isn’t making any more land, and farmland in particular offers a hedge against inflation, fluctuations in income, and capital appreciation.
Name another competing asset that can promise that.
By now you are thinking this all sounds good but you don’t want a life of denim overalls, milking cows, cursing early morning roosters, needing a ton of capital to get started, and other “benefits” of actual farming. Well, good news. You can own farmland and not deal with any of this.
Let’s talk about Farmfolio, who are changing the game when it comes to farmland ownership. They use an advanced data-driven approach to identify the most productive land, buy it, and then offer small subdivided plots called LOTs to individual owners like you. And while it’s your land, there is no sweat equity involved. Their expert team manages everything from seed to shelf including land development, property management, harvesting, packing, sales, and distributing profits back to LOT owners.
They’ve just sold out a Tahiti lime farm in one of the world’s premier growing regions, and their limes are now being found at your local Walmart, Costco, and Trader Joe’s.
While this opportunity is gone, a few more are going to be available very soon. Get started by visiting Farmfolio’s website and see how they can help you generate inflation-beating returns. Tony Soprano and your portfolio would approve.