FarmTogether releases a new study illustrates farmland’s historical resilience
The study found that while many sectors across the global economy continue to experience negative pandemic-induced challenges, farmland remained a reliable asset
Farmland investment manager FarmTogether released a new study that illustrates farmland’s historical resilience in the face of financial turbulence over the last three decades, demonstrated by the asset’s stable performance since the onset of the COVID-19 pandemic and subsequent market turbulence. The study, titled ‘Farmland: A Historically Stable Asset During Uncertain Times,’ examines farmland’s performance in the context of several major asset classes, including equities, bonds, commercial real estate, and REITs.
“The last few years, even weeks, have been challenging to navigate from a portfolio management perspective,” said David Chan, Chief Client Officer and Head of Business Development at FarmTogether. “This study comes at a critical moment for those searching for uncorrelated, defensible alternatives for real capital preservation.”
The study found that while many sectors across the global economy continue to experience negative pandemic-induced challenges, farmland remained a reliable asset throughout this tumultuous period. Despite early headwinds led by supply chain disruptions and reduced demand for certain products, farmland investments experienced net positive growth each year over the last three years, outpacing the performance of each asset analysed in the study.
The study attributes farmland’s performance throughout this period, and several decades prior, to the asset’s historically low volatility, low correlation with traditional assets, and rising cropland values, which are sitting at a record $5,050 per acre in the US. The study additionally reverberates farmland’s historical role as a hedge against rising prices during inflationary environments; since the onset of the pandemic, farmland returns have had a 0.97 correlation with the Consumer Price Index (CPI).
The study found that while many sectors