A Farmland Investment Primer

GMO

Julie Koeninger

Research

9 Pages

GMO explores why farmland has become an institutionalized asset class, highlighting its role as an inflation hedge, diversification tool, and source of biological yield. The paper argues constrained arable land and rising protein demand could support long term farmland values, despite bubble concerns in regions.

Key Takeaways

Low Correlation Benefits: U.S. farmland showed just 0.00 correlation to commodities and negative 0.35 correlation to aggregate bonds from 1994 through 2013.
Strong Historical Returns: The NCREIF Farmland Index generated 12.5% annualized returns over 20 years and 17.5% over 10 years, with lower volatility than equities.
Global Demand Pressure: The FAO projects world food production must rise 60% by 2050 as global population increases from 7.16 billion to 9.55 billion.
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