Farmland Investing: How to Invest in Agricultural Land

Farmland Investment Performance and Drivers

The NCREIF Farmland Index has returned approximately 11.2% annually from 1992 to 2020, with returns split roughly evenly between income (cash rent or crop revenue) and appreciation (land value increases). This compares favorably to the S&P 500's 9.7% annual return over the same period, but with dramatically lower volatility: 6.3% standard deviation for farmland vs 14.7% for the S&P 500. The Sharpe ratio (risk-adjusted return) of farmland is approximately 1.4, compared to 0.5 for the S&P 500. Farmland's correlation with US stocks is approximately 0.0 to 0.1, and with US bonds approximately 0.1 — providing powerful diversification benefits.

The returns are driven by several secular trends. Global food demand is rising with population growth (projected to reach 10 billion by 2050) and increasing meat consumption in developing countries (which requires more grain for animal feed). Arable land supply is fixed and actually declining due to urbanization, desertification, and soil degradation. Climate change is reducing agricultural productivity in some regions. These supply/demand fundamentals support long-term farmland appreciation. Additionally, farmland is a natural inflation hedge — crop prices and land values tend to rise with inflation, and farmland lease payments often include inflation escalators. During the high-inflation 1970s, farmland was one of the best-performing asset classes. Inflation protection strategies →

Farmland REITs: The Most Liquid Option

Farmland REITs (Real Estate Investment Trusts) are publicly traded companies that own and lease farmland. They offer the most liquid and accessible way to invest in farmland — you can buy and sell shares on the stock market any day. The two main US farmland REITs are Farmland Partners (FPI) and Gladstone Land (LAND). Both own diversified portfolios of farmland across the US, primarily in row crops (corn, soybeans, wheat, rice) and specialty crops (almonds, pistachios, berries, vegetables). They generate income by leasing the land to farmers and distribute most of their taxable income as dividends.

Farmland Partners (FPI) owns approximately 160,000 acres across 20 states. Its portfolio is diversified by crop type and geography, with the largest concentrations in the Midwest (corn/soybeans) and the South (rice, cotton). FPI currently yields approximately 2-3% in dividends and has grown its net asset value over time. Gladstone Land (LAND) owns approximately 115,000 acres across 15 states, with a greater focus on high-value permanent crops like almonds, pistachios, and berries in California, Florida, and the Southeast. LAND yields approximately 3-4% and has a long track record of dividend growth. Both REITs trade on the Nasdaq and can be held in any brokerage account, including tax-advantaged accounts like IRAs. The main disadvantage of farmland REITs compared to direct ownership is that REIT share prices are correlated with the stock market (beta of approximately 0.5), so you do not get the full diversification benefit of direct farmland ownership. REITs explained →

Farmland Crowdfunding Platforms

Farmland crowdfunding platforms allow investors to buy fractional shares of farmland with minimums as low as $10,000 to $15,000. These platforms acquire farms, lease them to operators, and distribute rental income and land appreciation to investors. The two largest platforms are FarmTogether and AcreTrader. Both are open to accredited investors (meeting income or net worth requirements) and offer professionally managed farmland investments with no direct operational responsibility.

FarmTogether was founded in 2017 and has facilitated over $200 million in farmland investments. It offers both individual farm offerings and diversified funds. Investments typically have 5-10 year hold periods, target 8-12% annual returns, and are structured as LLC memberships. AcreTrader is similar, offering individual farm offerings with target returns of 8-12% and hold periods of 5-10 years. AcreTrader has invested in row crops, permanent crops, and timber across multiple US states. Both platforms charge management fees (typically 0.75% to 1.5% annually) and may charge performance fees on profits above a threshold. The key advantage of crowdfunding platforms is access to institutional-quality farmland investments with low minimums. The disadvantages include illiquidity (your capital is locked up for years), platform risk, and management fees that reduce net returns.

Direct Farmland Ownership

Direct ownership of farmland is the most traditional approach but requires significant capital (typically $500,000+ for a meaningful farm), operational knowledge, and active management. Direct owners can either farm the land themselves (requiring farming expertise and equipment) or lease it to a tenant farmer (passive income but requires landlord responsibilities). The advantage of direct ownership is that you capture the full return without management fees. The disadvantages are concentration risk (a single farm), illiquidity (selling a farm takes months to years), operational complexity (finding tenants, maintaining property, managing crop insurance), and the need for significant due diligence (soil quality, water rights, local market conditions).

Most farmland in the US is owned by families who have held it for generations. Direct ownership is most practical for high-net-worth investors who live near agricultural areas and understand local farming conditions. For most investors, farmland REITs or crowdfunding platforms provide better diversification, professional management, and liquidity at the cost of some return. The decision depends on your capital, expertise, and desired level of involvement. Some investors combine approaches — a core allocation to farmland REITs for liquidity and a satellite allocation to crowdfunding platforms for higher potential returns. Real estate investing for beginners →

Is farmland a good investment?

Farmland has historically been an excellent investment on a risk-adjusted basis. The NCREIF Farmland Index returned 11.2% annually from 1992-2020 with only 6.3% volatility — roughly the same return as the S&P 500 with less than half the volatility. Farmland has near-zero correlation with stocks and bonds, making it a powerful portfolio diversifier. It provides a natural inflation hedge because food prices rise with inflation. The long-term fundamentals are supported by rising global food demand, fixed land supply, and climate change impacts on agriculture. However, farmland is illiquid (even REITs have stock market correlation), and direct ownership requires significant capital and expertise. For most investors, a 5% to 10% allocation to farmland via REITs and crowdfunding platforms is a prudent way to access this asset class.

What are the best farmland ETFs and REITs?

The two main US farmland REITs are Farmland Partners (FPI) and Gladstone Land (LAND). Both offer liquid, publicly traded exposure to diversified farmland portfolios and pay dividends. There are no pure-play farmland ETFs in the US. The closest option for ETF investors is the Invesco DB Agriculture Fund (DBA), which tracks agricultural commodity futures rather than farmland itself. For international farmland exposure, consider the iShares MSCI Agriculture Producers ETF (VEGI), which holds global agribusiness stocks. For most farmland investors, a combination of FPI and LAND provides good US farmland exposure with daily liquidity. For higher potential returns with less liquidity, FarmTogether and AcreTrader offer direct farmland ownership through crowdfunding platforms.

How much does farmland cost per acre?

US farmland prices vary dramatically by location, soil quality, water access, and crop type. As of 2025, the average US cropland value is approximately $5,000 per acre, but this ranges from $2,000-$4,000/acre in the Dakotas and Great Plains to $6,000-$12,000/acre in the Midwest (Corn Belt) to $15,000-$30,000+/acre in California's Central Valley for irrigated cropland and permanent crops like almonds or grapes. Pastureland is much cheaper, averaging approximately $1,500/acre nationwide. These prices do not include the cost of buildings, equipment, or water rights. Farmland crowdfunding platforms typically offer shares in farms valued between $1 million and $20 million, with minimum investments of $10,000 to $25,000.

What are the risks of farmland investing?

The main risks include weather and climate risk (droughts, floods, storms can destroy crops and reduce land value), commodity price risk (crop prices are volatile and affect farm income), water access risk (especially in drought-prone regions), policy risk (changes to farm subsidies, crop insurance, trade policy, and immigration laws affecting farm labor), operational risk (finding and retaining quality tenant farmers), and liquidity risk (farmland can take months to sell, and REITs trade at premiums/discounts to net asset value). Climate change poses a growing long-term risk, potentially reducing agricultural productivity in some regions while increasing it in others. Diversification across geographies and crop types is essential to mitigate these risks. Investors should also monitor interest rates, as rising rates can reduce farmland values by increasing the discount rate applied to future cash flows.

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