Farmland as an Investment Asset

ORLANDO (ResourceInvestor.com) — Over the past half century, U.S. farmland prices rose though two long bull markets, punctuated by a short, severe crash. Farmland rents have kept to a narrower range, centered around 7%+ of land value.

Farmland prices paced or exceeded monetary inflation through most of the period. Since the CPI has been severely diluted by geometric averaging and hedonics, an alternative CPI measure from Shadow Government Statistics is shown for comparison (see chart below).

Other forces were at work as well. The Farm Boom period of the 1970s was sparked by a tightening world grain supply which led to soaring prices and predictions of famine. I recall a grim symposium talk closing with the words: