Why Farmland Deserves a Place in Your Investment Portfolio
When it comes to diversifying a portfolio, most investors default to the familiar: stocks, bonds, maybe a sprinkle of real estate or alternative funds. But there’s one asset class that rarely makes the conversation yet checks many of the boxes smart investors care about—farmland.
This isn’t nostalgia speaking, though I did grow up around farms and understand their value firsthand. It’s about financial discipline, risk-adjusted returns, and strategic thinking—principles that form the foundation of every portfolio we manage at TAMMA Capital.
A Shrinking Supply, A Growing Demand
Farmland is one of the few truly finite resources we can invest in. You can't manufacture more of it. Meanwhile, the global population continues to climb, increasing the need for food, fuel, and fiber. That’s basic supply and demand—less farmland, more mouths to feed.
In the United States, we're fortunate to have some of the most fertile and productive soil in the world. That isn't just patriotic pride. It's a competitive advantage in a world where quality arable land is increasingly scarce. Yet, we continue to lose farmland to urbanization at a steady pace.
That shrinking supply combined with long-term demand for agricultural outputs creates a compelling case for farmland as an appreciating asset. In fact, USDA data suggests that American farmland has appreciated by about 6% annually over the past 50 years.
Unlevered and Uncomplicated
At TAMMA, we’ve partnered with platforms like AcreTrader to access farmland investments. One key distinction: we focus on unlevered farmland assets. That means no debt. This isn’t just a preference—it’s strategic risk management.
Leverage can boost returns, but it also introduces interest rate risk and volatility. By avoiding it, we create a more stable return profile. Think of it as investing in productive dirt that generates income and steadily appreciates over time—without the stress of fluctuating debt service.
These farmland investments also remove the operational burden. We’re not betting on the success of a specific crop. The land is leased to a professional farmer. They manage the crop production. We simply earn income through lease payments—usually paid upfront and regardless of harvest outcomes.
Comparing Farmland to Residential Real Estate
People often ask, “Isn’t owning farmland the same as owning a rental property?”
Not exactly.
With residential real estate, you're dealing with tenants, maintenance, fluctuating occupancy, and depreciating assets like appliances and fixtures. With farmland, you're investing in the land itself—a productive asset with very low operating overhead. The farmer isn’t calling you to fix a water heater.
Moreover, farmland doesn’t face the same supply elasticity that housing does. You can always build more apartments or condos. You can’t create more Iowa.
A Natural Hedge Against Inflation and Uncertainty
Farmland has historically shown a positive correlation to inflation—about 0.67 according to some studies. That’s higher than many traditional asset classes. When inflation rises, farmland often rises with it.
It’s also a ballast in turbulent times. Farmland has outperformed equities during past periods of economic uncertainty. That doesn’t mean it’s invincible, but it does tend to behave differently than stocks or bonds. And that behavior—uncorrelated, steady, boring even—is exactly why we like it.
How Investors Can Access Farmland
Traditionally, farmland investing was reserved for institutional investors or families that happened to inherit property. That’s no longer the case. Platforms like AcreTrader allow accredited investors to buy fractional ownership in specific farms, typically with a $15,000 minimum investment.
And it’s flexible. You can invest through a taxable brokerage account or through a self-directed IRA. We often use both depending on each family’s goals, cash flow needs, and tax profile.
Investors receive annual cash distributions from lease income, and then at the end of a 5–10 year holding period, participate in any price appreciation when the land is sold.
Who’s Selling the Land—and Why?
One of the most common misconceptions is that hedge funds and institutional buyers are gobbling up America’s farmland, pricing out family farmers in the process.
The data tells a different story: 70–80% of farmland sales are still between farmers. Platforms like AcreTrader don’t typically compete at the top end of the market. Instead, they work with sellers—often farmers themselves—looking for strategic liquidity.
Many of these transactions are sale-leasebacks. A farmer might want to sell one parcel to free up capital to expand elsewhere. They maintain operational control but get access to capital for reinvestment. Other sellers include families that have inherited land but live far away, or operators approaching retirement without a succession plan.
Appreciation Plus Cash Flow
Farmland returns come from two components: appreciation and cash flow. Appreciation, as mentioned, is the primary driver. But there is also cash flow from the farmer’s lease payments—typically in the 2–3% range annually.
It’s not a high-yielding asset, but it is consistent. These leases are often paid upfront and independent of crop outcomes. There’s also potential for upside via “flex leases,” where investors share in a percentage of crop revenues during strong years.
It’s a conservative structure by design—low leverage, reliable income, and meaningful appreciation over time. In a diversified portfolio, farmland serves as a stabilizer and a long-term compounder.
Is Farmland Right for You?
Farmland isn’t for everyone. It’s illiquid, long-term, and, yes, boring. But for families seeking meaningful diversification, long-term appreciation, and protection against economic shocks, it deserves a serious look.
At TAMMA Capital, we use farmland not as a speculative swing, but as part of a balanced risk-management strategy. One that helps our families sleep better at night, knowing their capital is working quietly in the background—in productive dirt.