A Farmland Investment Primer

GMO

Julie Koeninger

Research

9 Pages

GMO explores farmland investing as a diversifying real asset tied to inflation protection, biological growth, and global food demand. The paper argues institutional ownership remains below 1% of global farmland despite 20 year annualized returns of 12.5%, while warning investors against chasing regional valuation bubbles.

Key Takeaways

Low Correlation Benefits: U.S. farmland showed just 0.02 correlation with commodities and negative 0.35 correlation with aggregate bonds from 1994 through 2013.
Demand Supply Imbalance: Global population is projected to rise from 7.16 billion in 2013 to 9.55 billion by 2050, requiring 60% higher food production.
Bubble Risk Emerging: NCREIF Farmland Index generated 17.5% annualized returns over 10 years, yet GMO highlights cheaper farmland opportunities in Arkansas and Georgia versus Illinois.
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