Dean Pomerleau Posted July 1, 2022 Report Share Posted July 1, 2022 Disclaimer: Please don't consider this an endorsement or investment advice. Do your own due diligence. I have no affiliation with Farmland LP. Given the current financial climate, I'm intrigued by the idea of investing in tangible assets, and in particular farmland as a hedge against inflation and instability in the financial markets. Here is a recent NYT's article on the benefits of investing in farmland as an uncorrelated asset: https://www.nytimes.com/2021/10/08/business/mutfund/farmland-is-valuable-but-buying-it-is-tricky-for-fund-investors.html Fortune recently wrote: In these times of careening stock prices, obsession with the glamour of Bitcoin, and spiking rates, farmland provides the kind of comfort food wary investors should be looking for. As the article describes, there are several ways to purchase farmland. If you are Bill Gates, you can buy farmland outright yourself. He directly owns over 270,000 acres across 20 states (~0.04% of all US farmland). There are also a couple REIT's and on-line crowdfunding sites focused on farmland investments. But I was just "meh" when I researched them. The investment opportunity I find most interesting is a company called Farmland LP. What makes them nearly unique is their business model. They take investment money from (accredited) investors and buy high quality, conventional farmland with good soil and good water rights that are currently growing low-margin conventional row crops like corn or wheat. They then take the property through the 3-year process of converting it to organic farmland - something most farmers can't afford to do. They then either lease the land to 3rd-party farmers at a higher rate per acre than convention farmland or farm the land themselves. In either case, the idea is to replace the commodity row crops with much higher margin, and more environmentally-friendly organic fruits and vegetables grown via sustainable, regenerative agriculture. For example, they are in the process of converting 600 acres of a 4000+ acre farm they own in California to grow organic blueberries, which they then sell to Driscoll, who supplies Whole Foods and other high-end supermarkets: Here is a recent Time article profiling Farmland LP and highlighting how there model seems good for investors, good for farmers and good for the environment. Last year they were rated #1 among 10,000 global corporations by a leading Environment, Social, Governance (ESG) rating firm. Farmland LP's "Fund 1" (which includes the Burns Farm blueberries and several other properties) has been going since 2013 and has returned an average of ~9.5% per year. The big downside is the minimum investment is $50K. Has anyone else ever considered investing in farmland or have any opinion about it? Know of any better way to get in, with lower upfront cost? I kind of like the idea of supporting sustainable agriculture with my investing, in the same way I do by subscribing to my local CSA. It beats the ethics of many other investments and appears to offer the potential for a competitive return and a good hedge against inflation. But I should repeat, please do not consider investment advice and I have no affiliation with Farmland LP. --Dean Quote Link to comment Share on other sites More sharing options...
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