When building a portfolio, you may be tempted to stick with traditional stocks, bonds, mutual funds, and exchange-traded funds and stay away from nontraditional investment opportunities. For many, the idea of investing in agriculture is unfamiliar and seems too unconventional since it does not receive as much attention in mainstream investment discussions. Yet investments in farmland and timberland are much more common than you think, as many of the world’s largest investors already understand the benefit of agricultural investing and how it can help them preserve and grow their wealth. Not only do these investments offer steady returns and desirable tax benefits, they can offer investors a chance to pursue their dreams of owning farms or ranches.
If you’re curious about how investors can invest in agriculture on a large scale, here are a few well-known investors that include agriculture in their portfolio.
Ted Turner, known for founding cable news channel CNN, is the second-largest individual landowner in the United States. He began buying ranches 30 years ago and now has two million acres and 55,000 bison across seven states. Like many agriculture investors, he generates income by selling the bison he raises. Turner has quoted Gone with the Wind regarding land, saying “It’s the only thing that lasts.”
Bill Gates is one of the most well-known businessman, investor and philanthropist in the country. Since partially divesting from Microsoft, Gates has invested and continued to grow his personal fortune, which has included investing in agriculture and farmland. He has purchased thousands of acres of farmland across the southeast United States. In addition to being a relatively stable investment, agriculture also allows Gates to work towards his passion of conservation and sustainability. On the philanthropic side, The Bill and Melinda Gates Foundation has contributed many millions of dollars into global agriculture development.
John Malone, former CEO of Tele-Communications Inc., credits his interest in investing in agriculture and land to Ted Turner, though he has surpassed Turner and now holds the title of largest landowner in the country. While he is passionate about conservation, the biggest consideration when purchasing land is whether or not it makes economic sense, and often times it does. "Productive land is one of the very few permanent values throughout history," Malone says. Land appreciates value at a steady rate, and is much less volatile than other investment opportunities.
George W. Bush is no stranger to farming and ranching and was famous for retreats to his Prairie Chapel Ranch in McLennan County, Texas during his presidency. But many Americans don’t know that his family invested in more than 100,000 acres of land in Paraguay's northern "Chaco" region, which sits on top of a giant aquifer.
These investors may be able to invest vast amounts in land and agriculture, but it is possible to take advantage of the benefits of agriculture investing on a smaller scale. Whether you own thousands of acres across the country or are investing in a single farm, these assets provide the opportunity to diversify a portfolio by providing an investment that will increase in value over time and keep pace with inflation. In addition to the appreciation of the land, the ability to generate income from the land provides a steady yield for those seeking replacements the current miniscule rates from certificates of deposit. As John Malone explained, “you get protection from the fact that the thing your asset produces is desired by a worldwide market. To me it looks like one of the safest places you can invest money is productive land."