Where Do Farmland Values Go From Here?
Despite record-breaking land prices in most areas of farm country, Ben Gordon, founder and CEO of Fractal still believes farmland is one of the most underinvested asset classes with the potential for massive financial returns.
Gordon… “If you look at some of the analysis on Brazil, you know, our biggest commodities competitor here in the United States, up to half of Brazilian farmland could be out of its climate optimal zone by 2030. In other words, it's not the best place to raise corn or soybeans is where they're growing them, you know, and so if you look at the growth of demand, the limit or even decline of supply. That is a place you want to be as an investor over the long term. And then over the near term, this is just a really steady asset. And farmland tends to perform really well in times of volatility. So you combine just really good underlying fundamentals, a great financial dynamic that protects the rest of your portfolio, inflation protection. And then the last thing is agriculture is one of those strange, wonderful places where in the right scenarios, there are win-wins between environmental impact and financial impact. Now, it's not everywhere. We learned that from carbon. We've learned that from a lot of different places. But where a farmer is using one of these climate-friendly practices for good agronomics, good cash flows, that's a place we really want to double down because that will lend itself to even more impact on the financial side. And so we really like an ESG story that also has a cash flow story behind it.”
Again, that’s Fractal co-founder and CEO, Ben Gordon.