Why Invest in Farmland?
By Gary L. Smith
Many African Americans have ties to farmland either through inheritance, or through some form of ancestral rights. Whenever the word “farmland” comes up most of us immediately envision images of dirt roads between fields of crops, with beautiful sunsets. But have you ever considered such an investment as a strategy for creating wealth?
You may be surprised to learn that investing in farmland may indeed offer the kind of stability and consistency you’ve been seeking. Farmland in the U.S. is highly fragmented, typically with family-owned farms passed down from generation to generation. These farms make up a large portion of the farmland market, and with these valuable assets controlled by multi-generational families, it’s exceptionally difficult to access (there’s that word again) the growth potential of farmland investing.
Access to information is the gap we have in understanding potential investment opportunities that are literally within our grasp. An investment in farmland is an effective strategy for hedging against inflation and volatile markets. In fact, farmland is known as a low volatility asset. With many assets as consumer prices rise with inflation, the value of the asset decreases. But with farmland, the value tends to rise right along with consumer prices.
As a non-correlated asset, farmland investors are not handcuffed to the uncertainty of the stock market. Regardless of the stability or instability of the current market, farmland can continue to produce income and rise in value. Since farmland has only become scarcer over the years, a trend that is likely to continue, capital appreciation will likely continue to grow as well.
The Holidays are rapidly approaching, so before you pass the turkey, and share gifts, share and pass this information along. This is a subject worth discussing if there is farmland in your family. Having said that, any potential investor should conduct their own due diligence first and seek out and consult with the most knowledgeable and experienced investment advisor you can get. For the best results, choose someone who specializes in farmland to gain the most from your investment (inheritance).
